EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LUCENT TECHNOLOGIES INC.,
SOLARA ACQUISITION INC.,
AND
ORTEL CORPORATION
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Dated as of February 7, 2000
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TABLE OF CONTENTS
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1. The Merger 2
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1.1. General............................................................... 2
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1.2. Certificate of Incorporation.......................................... 2
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1.3. By-Laws............................................................... 2
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1.4. Directors and Officers................................................ 2
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1.5. Conversion of Securities.............................................. 3
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1.6. Adjustment of the Exchange Ratio...................................... 3
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1.7. No Fractional Shares.................................................. 3
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1.8. Exchange Procedures; Distributions with Respect to
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Unexchanged Shares; Stock Transfer Books.............................. 4
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1.9. No Further Ownership Rights in Company Common Stock................... 6
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1.10. Return of Exchange Fund............................................... 6
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1.11. Further Assurances.................................................... 6
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2. Representations and Warranties of the Company................................ 6
2.1. Organization.......................................................... 6
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2.2. Subsidiaries.......................................................... 7
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2.3. Capital Structure..................................................... 7
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2.4. Authority............................................................. 8
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2.5. No Conflict........................................................... 9
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2.6. SEC Documents; Undisclosed Liabilities................................ 10
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2.7. Lucent Registration Statement; Company Proxy Statement................ 10
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2.8. Absence of Certain Changes............................................ 11
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2.9. Properties............................................................ 12
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2.10. Leases................................................................ 13
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2.11. Contracts............................................................. 13
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2.12. Absence of Default.................................................... 13
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2.13. Litigation............................................................ 13
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2.14. Compliance with Law................................................... 13
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2.15. Intellectual Property; Year 2000...................................... 14
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2.16. Taxes................................................................. 15
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2.17. Absence of Changes in Benefit Plans................................... 16
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2.18. ERISA Compliance...................................................... 17
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2.19. Environmental Laws.................................................... 18
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2.20. Voting Requirements; Board Approval and Recommendation................ 19
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2.21. State Takeover Statutes............................................... 19
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2.22. Company Rights Agreement.............................................. 19
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2.23. Brokers............................................................... 20
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2.24. Opinion of Financial Advisor.......................................... 20
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2.25. Disclosure............................................................ 20
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3. Representations and Warranties of Lucent and Acquisition..................... 20
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3.1. Organization, Standing and Corporate Power............................ 20
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3.2. Capital Structure..................................................... 21
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3.3. Authority............................................................. 21
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3.4. No Conflict........................................................... 21
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3.5. Litigation............................................................ 22
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3.6. SEC Documents; Undisclosed Liabilities................................ 22
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3.7. Information Supplied.................................................. 23
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3.8. Absence of Certain Changes............................................ 23
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3.9. Brokers............................................................... 24
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3.10. Interim Operations of Acquisition..................................... 24
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3.11. Taxes................................................................. 24
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4. Conduct Pending Closing...................................................... 24
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4.1. Conduct of Business Pending Closing.................................... 24
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4.2. Prohibited Actions Pending Closing..................................... 24
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5. Additional Agreements........................................................ 27
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5.1. Access; Documents; Supplemental Information........................... 27
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5.2. No Solicitation by the Company........................................ 28
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5.3. Preparation of the Lucent Registration Statement
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and Company Proxy Statement; Company Stockholders Meeting............. 30
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5.4. Letter of the Company's Accountants; Letter of Lucent's Accountants... 31
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5.5. Reasonable Best Efforts............................................... 31
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5.6. Stock Options......................................................... 32
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5.7. Company Stock Plans................................................... 33
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5.8. Employee Benefit Plans; Existing Agreement............................ 33
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5.9. Indemnification....................................................... 34
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5.10. Fees and Expenses..................................................... 35
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5.11. Public Announcements.................................................. 35
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5.12. Affiliates............................................................ 36
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5.13. Listings.............................................................. 36
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5.14. Stockholder Litigation................................................ 36
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5.15. Reorganization........................................................ 36
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5.16. Company Rights Agreement.............................................. 36
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6. Conditions Precedent......................................................... 37
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6.1. Conditions Precedent to Each Party's Obligation to Effect the Merger... 37
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6.2. Conditions Precedent to Obligations of Acquisition and Lucent.......... 37
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6.3. Conditions Precedent to the Company's Obligations...................... 38
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6.4. Frustration of Closing Conditions...................................... 39
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7. Non-Survival of Representation and Warranties................................ 39
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8. Contents of Agreement; Parties in Interest; etc.............................. 39
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9. Assignment and Binding Effect................................................ 39
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10. Termination.................................................................. 40
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11. Definitions.................................................................. 40
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12. Notices...................................................................... 43
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13. Amendment.................................................................... 44
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14. Extensions; Waiver........................................................... 44
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15. Governing Law................................................................ 44
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16. No Benefit to Others......................................................... 44
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17. Effect of Termination........................................................ 44
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18. Severability................................................................. 45
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19. Section Headings............................................................. 45
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20. Schedules and Exhibits....................................................... 45
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21. Counterparts................................................................ 45
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of February 7, 2000 ("Agreement"), by
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and among LUCENT TECHNOLOGIES INC., a Delaware corporation ("Lucent"), SOLARA
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ACQUISITION INC., a Delaware corporation ("Acquisition"), and ORTEL CORPORATION,
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a Delaware corporation (the "Company").
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BACKGROUND
A. The Company is a Delaware corporation with its registered office
located at 32 Loockerman Square, Suite L-100, Dover, Delaware, and has
authorized 25,000,000 shares of common stock, par value $.001 per share
("Company Common Stock"), of which 12,814,280 shares of Company Common Stock are
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issued and outstanding, and 5,000,000 shares of preferred stock, par value $.001
per share ("Company Preferred Stock"), of which no shares of Company Preferred
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Stock are issued and outstanding. The Company is engaged principally in the
business of designing, manufacturing and supplying advanced optoelectronic
technologies.
B. Lucent is a Delaware corporation with its registered office located at
1013 Centre Road, Wilmington, Delaware.
C. Acquisition is a wholly-owned subsidiary of Lucent and was formed to
merge with and into the Company so that, as a result of the merger, the Company
will survive and become a wholly-owned subsidiary of Lucent. Acquisition is a
Delaware corporation with its registered office located at 1013 Centre Road,
Wilmington, Delaware, and has authorized an aggregate of 1,000 shares of common
stock, no par value per share ("Acquisition Common Stock").
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D. The Board of Directors of each of Lucent, Acquisition and the Company
has determined that this Agreement and the merger of Acquisition with and into
the Company (the "Merger") in accordance with the provisions of the Delaware
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General Corporation Law (the "DGCL"), and, subject to the terms and conditions
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of this Agreement, is advisable and in the best interests of Lucent, Acquisition
and the Company and their respective stockholders.
E. The Board of Directors of each of Lucent, Acquisition and the Company
have approved this Agreement, the Merger and the transactions contemplated
hereby.
F. The parties intend that, for United States federal income tax purposes,
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Code and that this Agreement shall constitute a plan of
reorganization.
G. Immediately following the execution and delivery of this Agreement,
Lucent and the Company will enter into a stock option agreement (the "Option
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Agreement"), pursuant to which the Company will grant to Lucent the option to
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purchase shares of Company Common Stock, upon the terms and subject to the
conditions set forth therein.
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NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound do hereby agree
as follows:
1. The Merger.
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1.1. General. (a) Upon the terms and subject to the conditions of
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this Agreement and in accordance with the DGCL, at the Effective Time, (i)
Acquisition shall be merged with and into the Company, (ii) the separate
corporate existence of Acquisition shall cease and (iii) the Company shall be
the surviving corporation (the "Surviving Corporation") and shall continue its
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corporate existence under the laws of the State of Delaware.
(b) The Merger shall become effective at the time of filing of a
certificate of merger substantially in the form of Exhibit A attached hereto
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(the "Certificate of Merger"), with the Secretary of State of the State of
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Delaware in accordance with the provisions of Section 251 of the DGCL, or at
such later date as the parties may mutually agree (the "Effective Time").
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Subject to the terms and conditions of this Agreement, the Company and
Acquisition shall duly execute and file the Certificate of Merger with the
Secretary of State of the State of Delaware at the time of the Closing. The
closing of the Merger (the "Closing") shall take place at the offices of Sidley
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& Austin, 875 Third Avenue, New York, New York, at 10:00 a.m., two business days
after the date on which the last of the conditions set forth in Section 6 shall
have been satisfied or waived, or on such other date, time and place as the
parties may mutually agree (the "Closing Date").
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(c) At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and
Acquisition shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and
Acquisition shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.
1.2. Certificate of Incorporation. The Certificate of Incorporation
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of the Company, as in effect immediately prior to the Effective Time, shall be
amended as set forth in Exhibit B and, as so amended, shall be the Certificate
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of Incorporation of the Surviving Corporation until thereafter amended as
provided therein or by applicable law.
1.3. By-Laws. The By-laws of Acquisition, as in effect immediately
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prior to the Effective Time, shall be the By-laws of the Surviving Corporation
until thereafter amended as provided therein or by applicable law.
1.4. Directors and Officers. From and after the Effective Time,
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(a) the directors of Acquisition at the Effective Time shall be the initial
directors of the Surviving Corporation, each
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to hold office in accordance with the Certificate of Incorporation and By-laws
of the Surviving Corporation, and (b) the officers of Acquisition at the
Effective Time shall be the initial officers of the Surviving Corporation, in
each case, until their respective successors are duly elected or appointed and
qualified.
1.5. Conversion of Securities. At the Effective Time, by virtue of
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the Merger and without any action on the part of Lucent, Acquisition, the
Company or the holders of any of the following securities:
(a) each issued and outstanding share of common stock of Acquisition
shall be converted into one validly issued, fully paid and nonassessable share
of common stock, no par value per share, of the Surviving Corporation;
(b) each share of Company Common Stock owned or held in treasury by
the Company and each share of Company Common Stock owned by Acquisition or
Lucent shall be canceled and retired without any conversion thereof and no
payment or distribution shall be made with respect thereto; and
(c) subject to the provisions of Sections 1.6 and 1.7, each share of
Company Common Stock issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled in accordance with Section 1.5(b)) shall
be converted into the right to receive 3.1350 (such number as adjusted in
accordance with Section 1.6, the "Exchange Ratio") of a validly issued, fully
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paid and nonassessable share of Lucent Common Stock. As of the Effective Time,
each share of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired, and each holder of record of a
certificate representing any such shares shall cease to have any rights with
respect thereto, other than the right to receive (i) shares of Lucent Common
Stock to be issued in consideration therefor upon the surrender of such
certificate and (ii) any cash, without interest, to be paid in lieu of any
fractional share of Lucent Common Stock in accordance with Section 1.7;
1.6. Adjustment of the Exchange Ratio. In the event that, prior to
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the Effective Date, any stock split, combination, reclassification or stock
dividend with respect to the Lucent Common Stock, any change or conversion of
Lucent Common Stock into other securities or any other dividend or distribution
with respect to the Lucent Common Stock (other than regular quarterly dividends)
should occur or, if a record date with respect to any of the foregoing should
occur, appropriate and proportionate adjustments shall be made to the Exchange
Ratio, and thereafter all references to the Exchange Ratio shall be deemed to be
to the Exchange Ratio as so adjusted.
1.7. No Fractional Shares. No certificates or scrip representing
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fractional shares of Lucent Common Stock shall be issued upon the surrender for
exchange of Certificates and such fractional share shall not entitle the record
or beneficial owner thereof to vote or to any other rights as a stockholder of
Lucent. In lieu of receiving any such fractional share, the stockholder shall
receive cash (without interest) in an amount rounded to the nearest whole cent,
determined by
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multiplying (i) the per share closing price on the New York Stock Exchange, Inc.
(the "NYSE") of Lucent Common Stock (as reported on the NYSE Composite
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Transactions Tape as such Tape is reported in the Wall Street Journal or another
recognized business publication) on the date immediately preceding the date on
which the Effective Time shall occur (or, if the Lucent Common Stock did not
trade on the NYSE on such prior date, the last day of trading in Lucent Common
Stock on the NYSE prior to the Effective Time) by (ii) the fractional share to
which such holder would otherwise be entitled. Lucent shall make available to
the Exchange Agent the cash necessary for this purpose.
1.8. Exchange Procedures; Distributions with Respect to Unexchanged
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Shares; Stock Transfer Books. (a) As of the Effective Time, Lucent shall
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deposit with the Exchange Agent for the benefit of the holders of shares of
Company Common Stock, certificates representing shares of the Lucent Common
Stock to be issued pursuant to Section 1.5(c) in exchange for the shares of
Company Common Stock. Such shares of Lucent Common Stock, together with any
dividends or distributions with respect thereto pursuant to Sections 1.7 and
1.8(c), are referred to herein as the "Exchange Fund".
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(b) As soon as practicable after the Effective Time, Lucent shall use
its reasonable efforts to cause the Exchange Agent to send to each Person who
was, at the Effective Time, a holder of record of certificates which represented
outstanding Company Common Stock (the "Certificates") which shares were
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converted into the right to receive Lucent Common Stock pursuant to Section
1.5(c), a letter of transmittal which (i) shall specify that delivery shall be
effected and risk of loss and title to such Certificates shall pass, only upon
actual delivery thereof to the Exchange Agent and (ii) shall contain
instructions for use in effecting the surrender of the Certificates. Upon
surrender to the Exchange Agent of Certificates for cancellation, together with
such letter of transmittal duly executed and such other documents as the
Exchange Agent may reasonably require, such holder shall be entitled to receive
in exchange therefor (A) a certificate representing the number of whole shares
of Lucent Common Stock into which the Company Common Stock represented by the
surrendered Certificate shall have been converted at the Effective Time, (B)
cash in lieu of any fractional share of Lucent Common Stock in accordance with
Section 1.7 and (C) certain dividends and distributions in accordance with
Section 1.8(c), and the Certificates so surrendered shall then be canceled.
Subject to Section 1.7 and Section 1.8(c), until surrendered as contemplated by
this Section 1.8(b), each Certificate, from and after the Effective Time shall
be deemed to represent only the right to receive, upon such surrender, the
number of shares of Lucent Common Stock into which such Company Common Stock
shall have been converted.
(c) No dividends or other distributions declared or made after the
Effective Time with respect to the Lucent Common Stock with a record date after
the Effective Time shall be paid to any holder entitled by reason of the Merger
to receive certificates representing Lucent Common Stock and no cash payment in
lieu of a fractional share of Lucent Common Stock shall be paid to any such
holder pursuant to Section 1.7 until such holder shall have surrendered its
Certificates pursuant to this Section 1.8. Subject to applicable law, following
surrender of any such Certificate, such holder shall be paid, in each case,
without interest, (i) the amount of any dividends or other
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distributions theretofore paid with respect to the shares of Lucent Common Stock
represented by the certificate received by such holder and having a record date
on or after the Effective Time and a payment date prior to such surrender and
(ii) at the appropriate payment date or as promptly as practicable thereafter,
the amount of any dividends or other distributions payable with respect to such
shares of Lucent Common Stock and having a record date on or after the Effective
Time but prior to such surrender and a payment date on or after such surrender.
(d) If any certificate representing shares of Lucent Common Stock or
any cash is to be issued or paid to any Person other than the registered holder
of the Certificate surrendered in exchange therefor, it shall be a condition to
such exchange that such surrendered Certificate shall be properly endorsed and
otherwise in proper form for transfer and such Person either (i) shall pay to
the Exchange Agent any transfer or other taxes required as a result of the
issuance of such certificates of Lucent Common Stock and the distribution of
such cash payment to such Person or (ii) shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable. Lucent or
the Exchange Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any holder of
shares of Company Common Stock such amounts as Lucent or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment under
the Code, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by Lucent or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the shares of Company Common Stock in respect of which such
deduction and withholding was made by Lucent or the Exchange Agent. All amounts
in respect of taxes received or withheld by Lucent shall be disposed of by
Lucent in accordance with the Code or such state, local or foreign tax law, as
applicable.
(e) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and subject to such other conditions
as the Board of Directors of the Surviving Corporation may impose, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Certificate the
shares of Lucent Common Stock as determined under Section 1.5(c) and pay any
cash, dividends or other distributions as determined in accordance with Sections
1.7 and 1.8(c) in respect of such Certificate; provided, that Lucent may, in its
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reasonable discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen or destroyed Certificate to deliver a
bond in such sum as it may reasonably require as indemnity against any claim
that may be made against Lucent, the Surviving Corporation or the Exchange Agent
with respect to the Certificate alleged to have been lost, stolen or destroyed.
(f) At the close of business on the day on which the Effective Time
occurs, the stock transfer books of the Company shall be closed and thereafter
there shall be no further registration of transfers of shares of Company Common
Stock on the records of the Company. From and after the Effective Time, the
holders of shares of Company Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares except
as otherwise provided herein or by applicable law.
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1.9. No Further Ownership Rights in Company Common Stock. All
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certificates representing shares of Lucent Common Stock delivered upon the
surrender for exchange of the Certificates in accordance with the terms hereof
(including any cash paid pursuant to Section 1.7) shall be deemed to have been
delivered (and paid) in full satisfaction of all rights pertaining to the
Company Common Stock previously represented by such Certificates.
1.10. Return of Exchange Fund. Any portion of the Exchange Fund
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which remains undistributed to the former holders of Company Common Stock for
six months after the Effective Time shall be delivered to Lucent, upon its
request, and any such former holders who have not theretofore surrendered to the
Exchange Agent their Certificates in compliance herewith shall thereafter look
only to Lucent for payment of their claim for shares of Lucent Common Stock, any
cash in lieu of fractional shares of Lucent Common Stock and any dividends or
distributions with respect to such shares of Lucent Common Stock. None of
Lucent, Acquisition, the Exchange Agent or the Company shall be liable to any
former holder of Company Common Stock for any such shares of Lucent Common Stock
held in the Exchange Fund (and any cash, dividends and distributions payable in
respect thereof) which are delivered to a public official pursuant to an
official request under any applicable abandoned property, escheat or similar
law.
1.11. Further Assurances. If at any time after the Effective Time
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the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments or assurances or any other acts or things are necessary,
desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets of either the
Company or Acquisition or (b) otherwise to carry out the purposes of this
Agreement, the Surviving Corporation and its proper officers and directors or
their designees shall be authorized to execute and deliver, in the name and on
behalf of either the Company or Acquisition, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of the Company or
Acquisition, all such other acts and things necessary, desirable or proper to
vest, perfect or confirm its right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of the Company or
Acquisition, as applicable, and otherwise to carry out the purposes of this
Agreement.
2. Representations and Warranties of the Company. Except as set forth
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on the disclosure schedule delivered by the Company to Lucent prior to the
execution of this Agreement (the "Company Disclosure Schedule") and making
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reference to the particular subsection of this Agreement to which exception is
being taken, the Company represents and warrants to Lucent and Acquisition as
follows:
2.1. Organization. Each of the Company and its Subsidiaries is a
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corporation or other legal entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
and has all requisite power and authority and all necessary governmental
approval to carry on its business as it has been and is now being conducted,
except for those jurisdictions where the failure to be so organized, existing or
in good standing
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individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect on the Company. Each of the Company and its Subsidiaries
is duly qualified or licensed as a foreign corporation to do business and is in
good standing (with respect to jurisdictions which recognize such concept) in
each jurisdiction where the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
except where the failure to be so qualified or licensed and in good standing,
would not have a Material Adverse Effect on the Company. The Company has made
available to Lucent prior to the execution of this Agreement complete and
correct copies of its certificate of incorporation and by-laws and the charter
documents for each of its Subsidiaries in each case, as amended to the date
hereof.
2.2. Subsidiaries. Item 2.2 of the Company Disclosure Schedule sets
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forth a true and complete list of each of the Company's Subsidiaries. All the
outstanding shares of capital stock of, or other equity interest in, each
Subsidiary of the Company have been validly issued, including in compliance with
all applicable federal and state securities laws, are fully paid and
nonassessable and are owned directly or indirectly by the Company, free and
clear of all Liens and free of any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests except
restrictions under applicable law.
2.3. Capital Structure. (a) The authorized capital stock of the
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Company consists of 25,000,000 shares of Company Common Stock and 5,000,000
shares of Company Preferred Stock. At the close of business on February 4,
2000, (i) 12,814,280 shares of Company Common Stock were issued and outstanding;
(ii) no shares of Company Common Stock were held by the Company in its treasury;
(iii) 250,000 shares of Company Preferred Stock have been designated as Series A
junior participating preferred stock, par value $.001 per share, and reserved
for issuance upon exercise of the right (the "Company Right") to purchase junior
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preferred stock, par value $.001 per share, pursuant to the Rights Agreement
dated as of March 3, 1995 (the "Company Rights Agreement"), between the Company
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and First Interstate Bank of California,; (iv) no shares of Company Preferred
Stock were issued and outstanding; (v) not more than 10,026,630 shares of
Company Common Stock were reserved for issuance pursuant to the 1990 Stock
Option Plan, the 1994 Equity Participation Plan, the 1999 Non-Qualified Stock
Option Plan and the Stephen R. Rizzone Non-Qualified Stock Option Agreement
(such plans or agreement, collectively, the "Company Stock Plans"), of which
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4,203,226 shares are subject to outstanding Company Stock Options. All
outstanding shares of capital stock of the Company are, and all shares which may
be issued will be, duly authorized, validly issued, fully paid and
nonassessable, not subject to preemptive rights and were issued in compliance in
all material respects with all applicable federal and state securities laws.
(b) Except as set forth in paragraph (a), at the close of business
on February 4, 2000, no shares of capital stock or other voting securities of
the Company were issued, reserved for issuance or outstanding. There are no
outstanding stock appreciation rights or rights (other than outstanding stock
options or other rights to purchase or receive Company Common Stock granted
under the Company Stock Plans (collectively, "Company Stock Options") or the
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Company Rights Agreement) to receive shares of Company Common Stock on a
deferred basis granted under the
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Company Stock Plans or otherwise and no warrants to purchase shares of capital
stock of the Company at any time or upon the occurrence of any stated event. The
Company has delivered to Lucent a complete and correct list, as of February 4,
2000, of the number of shares of Company Common Stock subject to Company Stock
Options and the exercise prices thereof.
(c) No bonds, debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the Company
may vote are issued or outstanding.
(d) Except as set forth in this Section 2.3 and except for changes
since February 4, 2000, resulting from the issuance of shares of Company Common
Stock pursuant to the Company Stock Options outstanding as of February 4, 2000,
and pursuant to the Company Stock Options issued after the date hereof as
expressly permitted by the terms of this Agreement, (i) there are not issued,
reserved for issuance or outstanding (A) any shares of capital stock or other
voting securities of the Company, (B) any securities of the Company convertible
into or exchangeable or exercisable for shares of capital stock or voting
securities of the Company, (C) any warrants, calls, options or other rights to
acquire from the Company or any Subsidiary, and no obligation of the Company or
any Subsidiary to issue, any capital stock, voting securities or securities
convertible into or exchangeable or exercisable for capital stock or voting
securities of the Company and (ii) as of the close of business on February 4,
2000, there are not any outstanding obligations of the Company or any Subsidiary
to repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such securities.
Except as set forth in Item 2.3(d) of the Company Disclosure Schedule, the
Company is not a party to any voting agreement with respect to the voting of any
such securities.
(e) There are no outstanding (i) securities of the Company or any
Subsidiary convertible into or exchangeable or exercisable for shares of capital
stock or other voting securities or ownership interests in any Subsidiary, (ii)
warrants, calls, options or other rights to acquire from the Company or any
Subsidiary, and no obligation of the Company or any Subsidiary to issue, any
capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable or exercisable for any capital
stock, voting securities or ownership interests in, any such Subsidiary or (iii)
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any such outstanding securities of such Subsidiaries or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such securities.
Except as set forth in Item 2.3(e) of the Company Disclosure Schedule and except
for the Company's ownership of the Subsidiaries, the Company does not, directly
or indirectly, have any ownership or other interest in, or control of, any
Person, nor is the Company or any Subsidiary controlled by or under common
control with any Person.
2.4. Authority. The Company has all requisite corporate power and
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authority to enter into this Agreement and, subject to Company Stockholder
Approval, to consummate the transactions contemplated by this Agreement. The
Company has all requisite corporate power and authority to enter into the Option
Agreement and to consummate the transactions contemplated
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thereby. The execution and delivery of this Agreement and the Option Agreement
by the Company and the consummation by the Company of the transactions
contemplated by this Agreement and the Option Agreement have been duly
authorized by all necessary corporate action on the part of the Company,
subject, in the case of the Merger, to Company Stockholder Approval. This
Agreement and the Option Agreement have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms.
2.5. No Conflict. (a) Except as set forth in Item 2.5 of the
-----------
Company Disclosure Schedule, the execution and delivery of this Agreement and
the Option Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the Option Agreement and compliance with the
provisions of this Agreement and the Option Agreement will not, conflict with,
or result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries under, (i) the certificate of incorporation or by-laws of
the Company or the comparable organizational documents of any of its
Subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
license or similar authorization applicable to the Company or any of its
Subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in paragraph (b), any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect on
the Company.
(b) No consent, approval, order or authorization of, action by or in
respect of, or registration, declaration or filing with, any federal, state,
local or foreign government, any court, administrative, regulatory or other
governmental agency, commission or authority or any non-governmental self-
regulatory agency, commission or authority (each a "Governmental Entity") is
-------------------
required by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or the Option
Agreement by the Company or the consummation by the Company of the transactions
contemplated by this Agreement or the Option Agreement, except for (i) the
filing of a premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
-------
and any applicable filings and approvals under similar foreign antitrust laws
and regulations; (ii) the filing with the Securities and Exchange Commission
(the "SEC") of (A) a proxy statement relating to the Company Stockholders
---
Meeting for the approval by the stockholders of the Company of the Merger (such
proxy statement, as amended or supplemented from time to time, the "Company
-------
Proxy Statement"), and (B) such reports under Section 13(a), 13(d), 15(d) or
- ---------------
16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") as may be
------------
required in connection with this Agreement, the Option Agreement and the
transactions contemplated hereby and thereby; (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents
-9-
with the relevant authorities of other states in which the Company is qualified
to do business; (iv) such filings with and approvals of The Nasdaq National
Market ("Nasdaq") to permit the shares of Company Common Stock that are to be
------
issued pursuant to the Option Agreement to be listed on Nasdaq; (v) filings with
Governmental Entities to satisfy the applicable requirements of state securities
or "blue sky" laws; and (vi) such consents, approvals, orders or authorizations
which if not made or obtained, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on the Company.
2.6. SEC Documents; Undisclosed Liabilities. The Company has filed
--------------------------------------
with the SEC since May 1, 1998, all required registration statements, reports,
schedules, forms, statements, proxy or information statements and other
documents (including exhibits and all other information incorporated therein)
(the "Company SEC Documents"). As of their respective dates, the Company SEC
---------------------
Documents complied or, with respect to those not yet filed, will comply in all
material respects with the requirements of the Securities Act of 1933 (the
"Securities Act"), or the Exchange Act, as the case may be, and, in each case,
--------------
the rules and regulations of the SEC promulgated thereunder and, except to the
extent that information contained in any Company SEC Document has been revised
and superseded by a later filed Company SEC Document, did not or, with respect
to those not yet filed, will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the Company SEC Documents comply as to form, as of their respective
dates of filing with the SEC, in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal recurring year-end audit adjustments).
Except for liabilities (i) reflected in such financial statements or in the
notes thereto, (ii) incurred in the ordinary course of business consistent with
past practice since the date of the most recent audited financial statements
included in the Company Filed SEC Documents, (iii) incurred in connection with
this Agreement or the Option Agreement or the transactions contemplated hereby
or thereby, or (iv) disclosed in Item 2.6 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on the Company.
2.7. Lucent Registration Statement; Company Proxy Statement. None
------------------------------------------------------
of the information supplied or to be supplied by the Company specifically for
inclusion or incorporation by reference in (i) the registration statement on
Form S-4 to be filed with the SEC by Lucent in connection with the issuance of
Lucent Common Stock in the Merger, together with all amendments thereto (the
"Lucent Registration Statement"), will, at the time the Lucent Registration
-----------------------------
Statement becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit
-10-
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading or (ii) the Company Proxy Statement will,
at the date it is first mailed to the Company's stockholders and the time of the
Company Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Company Proxy Statement will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or warranty is
made by the Company with respect to statements made or incorporated by reference
therein based on information supplied by Lucent specifically for inclusion or
incorporation by reference in the Company Proxy Statement.
2.8. Absence of Certain Changes. Except (i) for liabilities
--------------------------
incurred in connection with this Agreement or the Option Agreement or the
transactions contemplated hereby or thereby, (ii) as disclosed in the Company
SEC Documents filed and publicly available prior to the date of this Agreement
(as amended to the date of this Agreement, the "Company Filed SEC Documents"),
---------------------------
(iii) with respect to the matters set forth in subsection (d) below that do not,
individually or in the aggregate, exceed $5,000,000, and (iv) as set forth in
Item 2.8 of the Company Disclosure Schedule, since April 30, 1999, the Company
and its Subsidiaries have conducted their business only in the ordinary course,
and there has not been:
(a) any Material Adverse Effect in the Company;
(b) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any of
the Company's capital stock;
(c) any split, combination or reclassification of any of the
Company's capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for, shares of
the Company's capital stock, except for issuances of Company Common Stock upon
the exercise of Company Stock Options under the Company Stock Plans, in each
case awarded prior to the date hereof in accordance with their present terms;
(d) (i) any granting by the Company or any of its Subsidiaries to
any current or former director, executive officer or other key employee of the
Company or its Subsidiaries of any increase in compensation, bonus or other
benefits, except for normal increases in cash compensation in the ordinary
course of business consistent with past practice or as was required under any
employment agreements in effect as of the date of the most recent financial
statements included in the Company's quarterly report on Form 10-Q that is part
of the Company Filed SEC Documents, (ii) any granting by the Company or any of
its Subsidiaries to any such current or former director, executive officer or
key employee of any increase in severance or termination pay, except in the
ordinary course of business consistent with past practice, (iii) any entry by
the Company or any of its Subsidiaries into, or any amendments of, any
employment, deferred compensation, consulting, severance, termination or
indemnification agreement with any such current or former director,
-11-
executive officer or key employee, except in the ordinary course of business
consistent with past practice or (iv) any amendment to, or modification of, any
Company Stock Option;
(e) except insofar as may have been required by a change in
generally accepted accounting principles, any change in accounting methods,
principles or practices by the Company;
(f) any tax election that individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect on the Company or any
of its tax attributes or any settlement or compromise of any material income tax
liability;
(g) any issuance, delivery or agreement (conditionally or
unconditionally) to issue or deliver any bonds, notes or other debt securities,
or the incurrence of or agreement to incur any indebtedness for borrowed money,
other than in the ordinary course of business consistent with past practice or
the entry into any lease the obligations of which, in accordance with GAAP,
would be capitalized;
(h) entry into or commitment to enter into any other material
transaction except in the ordinary course of business consistent with past
practice; for the purposes of this subsection (h), a "material transaction" is
one that would be required by the Company to be disclosed in the Company SEC
Documents or in response to Item 2.10 or 2.11 of the Company Disclosure
Schedule.
2.9. Properties. (a) Each of the Company and its Subsidiaries has
----------
good and valid title to or a valid leasehold interest in all its properties and
assets reflected on the most recent balance sheet contained in the Company's
quarterly report on Form 10-Q that is part of the Company Filed SEC Documents or
acquired after the date thereof except for (i) properties and assets sold or
otherwise disposed of in the ordinary course of business since the date of such
balance sheet and (ii) properties and assets the loss of which individually or
in the aggregate could reasonably be expected to have a Material Adverse Effect
on the Company.
(b) Except as set forth in Item 2.9(b) of the Company Disclosure
Schedule, neither the Company nor any or its Subsidiaries owns any real
property. As to the Company's owned real property, the Company or a Subsidiary
(i) has good and marketable and insurable title to, such properties, free and
clear of all Liens, except for Permitted Liens, has, and Lucent immediately
after the Closing will have, access to public roads or valid easements over
private streets or private property for such ingress to and egress from such
properties, except for such items that, individually or in the aggregate, do not
materially interfere with the Company's ability to conduct its business as
currently conducted.
2.10. Leases. Item 2.10 of the Company Disclosure Schedule lists
------
all outstanding leases, both capital and operating, or licenses, pursuant to
which the Company or any of its Subsidiaries has is required to make payments of
over $250,000 per annum.
-12-
2.11. Contracts. Except as set forth on Item 2.11 of the Company
---------
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to or bound by any (a) non-competition agreement or any other similar agreement
or obligation which purports to limit in any material respect the manner in
which, or the localities in which, the business of the Company and its
Subsidiaries is conducted or by which the Company manufactures or distributes
its products, (b) material agreement that contains a change in control provision
for which Lucent would not receive the benefits of such agreement upon the
consummation of the transactions contemplated hereby, (c) agreement that would
create rights to any Person against Lucent or any of its Affiliates (other than
rights that would remain solely against the Company as in effect on the Closing
Date), or (d) joint venture or partnership agreement to which the Company or any
of its Subsidiaries is a party.
2.12. Absence of Default. Except as set forth in Item 2.12 of the
------------------
Company Disclosure Schedule, each of the Company and its Subsidiaries has
fulfilled and performed in all material respects its obligations under each of
the leases, contracts and other agreements listed or required to be listed in
Items 2.10 and 2.11 of the Company Disclosure Schedule to the extent such
obligations are required by the terms thereof to have been fulfilled or
performed through the date hereof (except for any such lease, contract or other
agreement which, by its terms, will expire prior to the Effective Time) and
neither the Company nor any such Subsidiary is, and, neither the Company nor any
such Subsidiary is alleged in writing to be, in breach or default under, nor is
there or is there alleged in writing to be any basis for termination of, any
such lease, contract or other agreement. To the best knowledge of the Company,
no other party to any such lease, contract or other agreement has breached or
defaulted thereunder. No event has occurred and no condition or state of facts
exists which, with the passage of time or the giving of notice or both, would
constitute such a default or breach by the Company or, to the best knowledge of
the Company, by any such other party. The Company is not currently
renegotiating any such lease, contract or other agreement or paying liquidated
damages in lieu of performance thereunder. Complete and correct copies of each
such lease, contract or other agreement and any amendments thereto have
heretofore been delivered to Lucent.
2.13. Litigation. Item 2.13 of the Disclosure Schedule sets forth
----------
(i) any actions, suits, arbitrations, legal or administrative proceedings or
investigations pending or, to the best knowledge of the Company, threatened
against the Company or any of its Subsidiaries; (ii) any judgment, order, writ,
injunction or decree of any court, governmental agency or arbitration tribunal
as to which any of the assets, properties or business of the Company or any of
its Subsidiaries is subject; and (iii) any actions, suits, arbitrations or
proceedings as to which the Company or any such Subsidiary is the plaintiff or
the Company or any such Subsidiary is contemplating commencing legal action
against any other Person. None of the matters, if any, listed on Item 2.13 of
the Disclosure Schedule could reasonably be expected to have a Material Adverse
Effect on the Company.
2.14. Compliance with Law. (a) Each of the Company and its
-------------------
Subsidiaries has complied with, and is not in violation of, any law, ordinance
or governmental rule or regulation
-13-
(collectively, "Laws") to which it or its business is subject, except where the
----
failure to comply with such Laws could not reasonably be expected to have a
Material Adverse Effect on the Company.
(b) Each of the Company and its Subsidiaries has obtained all
licenses, permits, certificates or other governmental authorizations
(collectively "Authorizations") necessary for the ownership or use of its assets
--------------
and properties or the conduct of its business other than Authorizations (i)
which are ministerial in nature and which the Company or such Subsidiary has no
reason to believe would not be issued in due course and (ii) which, the failure
of the Company or such Subsidiary to possess, could not reasonably be expected
to have a Material Adverse Effect on the Company.
(c) Neither the Company nor any of its Subsidiaries has received
notice of violation of, or knows of any violation of, any Laws to which it or
its business is subject or any Authorization necessary for the ownership or use
of its assets and properties or the conduct of its business, except for any such
violation which could not reasonably be expected to have a Material Adverse
Effect on the Company.
2.15. Intellectual Property; Year 2000. (a) The Company and its
--------------------------------
Subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trade secrets, trade names, service
marks, copyrights and other proprietary intellectual property rights and
computer programs (the "Intellectual Property Rights"), in each case, which are
----------------------------
material to the conduct of the business of the Company and its Subsidiaries.
(b) To the Company's best knowledge, neither the Company nor any of
its Subsidiaries has infringed upon any patent rights of any other Person,
except (i) as set forth in Item 2.15 of the Company Disclosure Schedule and (ii)
for any such infringement which could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company. In
addition, neither the Company nor any of its Subsidiaries has infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
Rights (other than patent rights) or other proprietary information of any other
Person, except for any such infringement which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. Neither the Company nor any of its Subsidiaries has received any
written charge, complaint, claim, demand or notice alleging any such
interference, infringement, misappropriation or violation (including any claim
that the Company or any such Subsidiary must license or refrain from using any
Intellectual Property Rights or other proprietary information of any other
Person) which has not been settled or otherwise fully resolved. To the
Company's best knowledge, no other Person has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property
Rights or other proprietary information of the Company or any of its
Subsidiaries, except for any such interference, infringement, misappropriation
or conflict which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
-14-
(c) Assuming that Lucent continues to operate the business of the
Company and its Subsidiaries as presently conducted and proposed to be
conducted, then, to the Company's best knowledge, Lucent's use of the
Intellectual Property Rights or other proprietary information which is material
to the conduct of the business of the Company and its Subsidiaries, taken as a
whole, will not interfere with, infringe upon, misappropriate or otherwise come
into conflict with the Intellectual Property Rights or other proprietary
information of any other Person.
(d) Each employee, agent, consultant or contractor who has
materially contributed to or participated in the creation or development of any
copyrightable, patentable or trade secret material on behalf of the Company, any
of its Subsidiaries or any predecessor in interest thereto either: (i) is a
party to a "work-for-hire" agreement, or substantially similar agreement, under
which the Company or such Subsidiary is deemed to be the original owner/author
of all property rights therein; or (ii) has executed an assignment or an
agreement to assign in favor of the Company, such Subsidiary or such predecessor
in interest, as applicable all right, title and interest in such material,
except for failures to do so that individually or in the aggregate could not
reasonably be expected to be material to the Company.
(e) The Company has completed a program directed at ensuring that
its and its Subsidiaries' products (including prior and current products and
technology and products and technology currently under development) are capable
upon installation of (i) operating in the same manner and in accordance with
their specifications on dates in both the Twentieth and Twenty-First centuries
and (ii) accurately processing, providing and receiving date data from, into and
between the Twentieth and Twenty-First centuries, including the years 1999 and
2000, and (iii) recognizing year 2000 as a leap year, provided that all non-
--------
Company products (e.g., hardware, software or firmware) used in or in
combination with the Company's products properly exchange data with the
Company's products in the same manner on dates in both the Twentieth and Twenty-
First centuries. In addition, the Company has installed all available Year 2000-
related customer upgrades and has taken all necessary steps to assure that the
year 2000 date change will not adversely affect its operations or the systems
and facilities that support the operations of the Company and its Subsidiaries,
except as could not reasonably be expected to have a Material Adverse Effect on
the Company. Finally, in conjunction with the Year 2000 date transitions, the
Company has not experienced any material date-related failures of its systems
and has no knowledge of any date-related issued experience by its customers with
respect to the Company's products.
2.16. Taxes. (a) Each of the Company and its Subsidiaries has filed
-----
all material tax returns and reports required to be filed by it and all such
returns and reports are complete and correct in all material respects, or
requests for extensions to file such returns or reports have been timely filed,
granted and have not expired, except to the extent that such failures to file,
to be complete or correct or to have extensions granted that remain in effect
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect on the Company. The Company and each of its Subsidiaries
has paid (or the Company has paid on its behalf) all Taxes shown as due on such
returns, and the most recent financial statements contained in the Company Filed
SEC Documents reflect an adequate reserve for all taxes payable by the Company
and its
-15-
Subsidiaries for all taxable periods and portions thereof accrued through the
date of such financial statements.
(b) No deficiencies for any taxes have been proposed, asserted or
assessed against the Company or any of its Subsidiaries that are not adequately
reserved for, except for deficiencies that individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect on the
Company. Except as set forth in Item 2.16 of the Company Disclosure Schedule,
the federal income tax returns of the Company and each of its Subsidiaries
consolidated in such returns have closed by virtue of the applicable statute of
limitations.
(c) Neither the Company nor any of its Subsidiaries has taken any
action or knows of any fact, agreement, plan or other circumstance that could
reasonably be expected to prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
(d) Except as set forth in Item 2.16 of the Company Disclosure
Schedule, the Company Benefit Plans and other Company employee compensation
arrangements in effect as of the date of this Agreement have been designed so
that the disallowance of a material deduction under Section 162(m) of the Code
for employee remuneration will not apply to any amounts paid or payable by the
Company or any of its Subsidiaries under any such plan or arrangement and, to
the best knowledge of the Company, no fact or circumstance exists that could
reasonably be expected to cause such disallowance to apply to any such amounts.
(e) Neither the Company nor any of its Subsidiaries has constituted
either a "distributing corporation" or a "controlled corporation" in a
distribution of stock qualifying for tax-free treatment under Section 355 of the
Code (x) in the two years prior to the date of this Agreement or (y) in a
distribution which could otherwise constitute part of a "plan" or "series of
related transactions" (within the meaning of Section 355(e) of the Code) in
conjunction with the Merger.
(f) Neither the Company nor any of its Subsidiaries is a party
(other than as an investor) to any industrial development bond.
2.17. Absence of Changes in Benefit Plans. Except as set forth in
-----------------------------------
Item 2.17 of the Company Disclosure Schedule, since the date of the most recent
audited financial statements included in the Company Filed SEC Documents, there
has not been any adoption or amendment by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical, welfare benefit or other
plan, arrangement or understanding providing benefits to any current or former
employee, officer or director of the Company or any of its Subsidiaries
(collectively, the "Company Benefit Plans"), or any change in any actuarial or
---------------------
other assumption used to calculate funding obligations with respect to any the
Company pension plans,
-16-
or any change in the manner in which contributions to any the Company pension
plans are made or the basis on which such contributions are determined.
2.18. ERISA Compliance. (a) With respect to the Company Benefit
----------------
Plans, no event has occurred and, to the best knowledge of the Company, there
exists no condition or set of circumstances, in connection with which the
Company or any of its Subsidiaries could be subject to any liability that
individually or in the aggregate could reasonably be expected to have a Material
Adverse Effect on the Company under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), the Code or any other applicable law.
-----
(b) Each Benefit Plan has been administered in accordance with its
terms, except for any failures so to administer any Benefit Plan that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect on the Company. The Company, its Subsidiaries and all
the Company Benefit Plans are in compliance with the applicable provisions of
ERISA, the Code and all other applicable laws and the terms of all applicable
collective bargaining agreements, except for any failures to be in such
compliance that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. Except as set forth in Item 2.18(b)
of the Company Disclosure Schedule, each Benefit Plan that is intended to be
qualified under Section 401(a) or 401(k) of the Code has received a favorable
determination letter from the Internal Revenue Service (the "IRS") that it is so
qualified and each trust established in connection with any Company Benefit Plan
that is intended to be exempt from federal income taxation under Section 501(a)
of the Code has received a determination letter from the IRS that such trust is
so exempt. To the best knowledge of the Company, no fact or event has occurred
since that date of any determination letter from the IRS which could reasonably
be expected to affect adversely the qualified status of any such Benefit Plan or
the exempt status of any such trust. There are no pending or, to the best
knowledge of the Company, threatened lawsuits, claims, grievances,
investigations or audits of any Benefit Plan that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(c) Neither the Company nor any of its Subsidiaries has incurred any
liability under Title IV of ERISA (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course). No
Benefit Plan has incurred an "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA or Section 412 of the Code) whether or not
waived. To the best knowledge of the Company, there are no facts or
circumstances that could reasonably be expected to materially change the funded
status of any Benefit Plan that is a "defined benefit" plan (as defined in
Section 3(35) of ERISA) since the date of the most recent actuarial report for
such plan. No Benefit Plan is a "multi employer plan" within the meaning of
Section 3(37) of ERISA.
(d) Except as set forth in Item 2.18(d) of the Company Disclosure
Schedule, no employee of the Company will be entitled to any additional benefits
or any acceleration of the time of payment or vesting of any benefits under any
Benefit Plan as a result of the transactions contemplated by this Agreement or
the Option Agreement. Except as set forth in Item 2.18(d) of the
-17-
Company Disclosure Schedule, no amount payable, or economic benefit provided, by
the Company or its Subsidiaries (including any acceleration of the time of
payment or vesting of any benefit) could be considered an "excess parachute
payment" under Section 280G of the Code as a result of the transactions
contemplated by this Agreement or the Option Agreement. Except as set forth in
Item 2.18(d) of the Company Disclosure Schedule, no Person is entitled to
receive any additional payment from the Company or its Subsidiaries or any other
Person (a "Parachute Gross-Up Payment") in the event that the excise tax of
--------------------------
Section 4999 of the Code is imposed on such Person. Except as set forth in Item
2.18(d) of the Company Disclosure Schedule, the Board of Directors of the
Company or any of its Subsidiaries has not granted to any Person any right to
receive any Parachute Gross-Up Payment.
(e) Except as set forth in Item 2.18(e) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any liability or
obligation under any "employee welfare benefit plans" (as defined in Section
3(1) of ERISA) to provide life insurance or medical benefits after termination
of employment to any employee or dependent other than as required by Part 6 of
Title I of ERISA.
(f) The Company and its Subsidiaries are in compliance with all
federal, state and local requirements regarding employment, except for any
failures to comply that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect on the Company. Neither the Company
nor any of its Subsidiaries is a party to any collective bargaining or other
labor union contract applicable to persons employed by the Company or any of its
Subsidiaries and no collective bargaining agreement is being negotiated by the
Company or any of its Subsidiaries. As of the date of this Agreement, there is
no labor dispute, strike or work stoppage against the Company or any of its
Subsidiaries pending or, to the knowledge of the Company, threatened which may
interfere with the respective business activities of the Company or any of its
Subsidiaries, except where such dispute, strike or work stoppage individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect on the Company. As of the date of this Agreement, to the knowledge of the
Company, none of the Company, any of its Subsidiaries or any of their respective
representatives or employees has committed any unfair labor practice in
connection with the operation of the respective business of the Company or any
of its Subsidiaries, and there is no charge or complaint against the Company or
any of its Subsidiaries by the National Labor Relations Board or any comparable
governmental agency pending or threatened in writing, in each case except where
such actions, charges or complaints, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company.
2.19. Environmental Laws. The Company has not received any notice
------------------
or claim (and is not aware of any facts that would form a reasonable basis for
any claim), or entered into any negotiations or agreements with any other
Person, and, to the best knowledge of the Company, neither the Company nor any
of its Subsidiaries is the subject of any investigation by any governmental or
regulatory authority, domestic or foreign, relating to any material or
potentially material liability or remedial action under any Environmental Laws.
There are no pending or, to the
-18-
best knowledge of the Company, threatened, actions, suits or proceedings against
the Company, any of its Subsidiaries or any of their respective properties,
assets or operations asserting any such liability or seeking any remedial action
in connection with any Environmental Laws, which, in either case, could not
reasonably be expected to have a Material Adverse Effect on the Company.
2.20. Voting Requirements; Board Approval and Recommendation. (a)
------------------------------------------------------
The affirmative vote of the holders of a majority of all outstanding shares of
Company Common Stock at the Company Stockholders Meeting to adopt this Agreement
(the "Company Stockholder Approval") is the only vote of the holders of any
----------------------------
class or series of the Company's capital stock necessary to approve and adopt
this Agreement, the Option Agreement and the transactions contemplated hereby
and thereby.
(b) The Board of Directors of the Company, by resolutions duly
adopted by unanimous vote of those voting at a meeting duly called and held and
not subsequently rescinded or modified in any way (the "Company Board
-------------
Approval"), has duly (i) determined that this Agreement, the Option Agreement
- --------
and the Merger are fair to and in the best interests of the Company and its
stockholders, and has declared the Merger to be advisable, (ii) approved this
Agreement, the Option Agreement, the Merger and the other transactions
contemplated hereby and thereby, (iii) resolved (subject to Section 5.2) to
recommend this Agreement and the Merger to such holders for approval and
adoption and (iv) directed (subject to Section 5.2) that this Agreement be
submitted to the Company's stockholders for consideration. The Company hereby
agrees to the inclusion in the Lucent Registration Statement and the Company
Proxy Statement of the recommendation of such Board of Directors.
2.21. State Takeover Statutes. The Board of Directors of the Company
-----------------------
(including the disinterested directors thereof) has approved the terms of this
Agreement and the Option Agreement and the consummation of the Merger and the
other transactions contemplated by this Agreement and Option Agreement, and such
approval constitutes approval of the Merger and the other transactions
contemplated by this Agreement and the Option Agreement by the Company's Board
of Directors under the provisions of Section 203 of the DGCL and represents all
the action necessary to ensure that such Section 203 does not apply to Lucent in
connection with the Merger and the other transactions contemplated by this
Agreement and the Option Agreement. To the knowledge of the Company, no other
state takeover statute is applicable to the Merger or the other transactions
contemplated hereby and by the Option Agreement.
2.22. Company Rights Agreement. The Company has taken all necessary
------------------------
action (i) to render the Company Rights inapplicable to the Merger and the other
transactions contemplated by this Agreement or the Option Agreement and (ii) to
ensure that (x) neither Lucent nor any of its affiliates is an Acquiring Person
(as defined in the Company Rights Agreement) and (y) a Distribution Date (as
defined in the Company Rights Agreement) does not occur by reason of the
announcement or consummation of the Merger or the consummation of any of the
other transactions contemplated by this Agreement or the Option Agreement.
-19-
2.23. Brokers. No broker, investment banker, financial advisor or
-------
other Person, other than SoundView Technology Group, Inc., or its successor, the
fees and expenses of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement and the Option
Agreement based upon arrangements made by or on behalf of the Company. The
Company has furnished to Lucent true and complete copies of all agreements under
which any such fees or expenses are payable and all indemnification and other
agreements related to the engagement of the Persons to whom such fees are
payable.
2.24. Opinion of Financial Advisor. The Company has received the
----------------------------
opinion of SoundView Technology Group, Inc., or its successor, dated the date of
this Agreement, to the effect that, as of such date, the Exchange Ratio is fair
from a financial point of view to holders of shares of the Company Common Stock
(other than Lucent and its affiliates), a signed copy of which opinion has been
or will promptly be delivered to Lucent.
2.25. Disclosure. None of the representations or warranties of the
----------
Company contained herein, none of the information contained in the Company
Disclosure Schedule, and none of the other information or documents furnished or
to be furnished to Lucent or Acquisition by the Company or any of its
Subsidiaries or pursuant to the terms of this Agreement, when taken as a whole,
contains, or at the Effective Time will contain, any untrue statement of a
material fact or omits, or at the Effective Time will omit, to state a material
fact required to be stated herein or therein necessary to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading in any material respect.
3. Representations and Warranties of Lucent and Acquisition. Except as
--------------------------------------------------------
set forth on the disclosure schedule delivered by Lucent to the Company prior to
the execution of this Agreement (the "Lucent Disclosure Schedule") and making
--------------------------
reference to the particular subsection of this Agreement to which exception is
being taken, Lucent and Acquisition represent and warrant to the Company as
follows:
3.1. Organization, Standing and Corporate Power. Each of Lucent and
------------------------------------------
Acquisition is a corporation or other legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the case may be,
and authority to carry on its business as now being conducted, except for those
jurisdictions where the failure to be so organized, existing or in good standing
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect. Each of Lucent and Acquisition is duly qualified or
licensed to do business and is in good standing (with respect to jurisdictions
which recognize such concept) in each jurisdiction in which the nature of its
business or the ownership, leasing or operation of its properties makes such
qualification or licensing necessary, except for those jurisdictions where the
failure to be so qualified or licensed or to be in good standing individually or
in the aggregate could not reasonably be expected to have a Material Adverse
Effect.
-20-
3.2. Capital Structure. Except as set forth in Item 3.3 of the
-----------------
Lucent Disclosure Schedule, the authorized capital stock of Lucent consists of
(i) 6,000,000,000 shares of common stock, par value $.01 per share ("Lucent
------
Common Stock") and (ii) 250,000,000 shares of preferred stock, par value $1.00
- ------------
per share ("Lucent Authorized Preferred Stock"), of which 7,500,000 shares have
---------------------------------
been designated Series A Junior Participating Preferred Stock ("Lucent Junior
-------------
Preferred Stock"). As of December 31, 1999, (i) approximately 3,178,657,861
- ---------------
shares of Lucent Common Stock were issued and outstanding, (ii) no shares of
Lucent Junior Stock Preferred Stock were issued and outstanding and (iii) other
than the Lucent Junior Preferred Stock, no other shares of Lucent Authorized
Preferred Stock are issued and outstanding. As of the date of this Agreement, no
bonds, debentures, notes or other indebtedness of Lucent having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which stockholders of Lucent may vote are issued or
outstanding. All outstanding shares of capital stock of Lucent are, and all
shares which may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
3.3. Authority. Each of Lucent and Acquisition has all requisite
---------
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. Lucent has all requisite corporate
power and authority to enter into the Option Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of this Agreement
by Lucent and Acquisition, and the execution and delivery of the Option
Agreement by Lucent, and the consummation by Lucent and Acquisition of the
transactions contemplated by this Agreement and the consummation by Lucent of
the transactions contemplated by the Option Agreement have been duly authorized
by all necessary corporate action on the part of Lucent and Acquisition, as
applicable. This Agreement has been duly executed and delivered by Lucent and
Acquisition and, constitutes the legal, valid and binding obligation of Lucent
and Acquisition, enforceable against each of them in accordance with its terms.
The Option Agreement has been duly executed and delivered by Lucent, and,
constitutes a legal, valid and binding obligation of Lucent, enforceable against
Lucent in accordance with its terms.
3.4. No Conflict. (a) The execution and delivery of this Agreement
-----------
and the Option Agreement do not, and the consummation of the transactions
contemplated by this Agreement and the Option Agreement and compliance with the
provisions of this Agreement and the Option Agreement will not, conflict with,
or result in any violation of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of a benefit under, or result in the
creation of any Lien upon any of the properties or assets of Lucent or
Acquisition or any of Lucent's other Subsidiaries under, (i) the certificate of
incorporation or by-laws of Lucent or Acquisition, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license or similar authorization
applicable to Lucent or Acquisition or any of Lucent's other Subsidiaries or
their respective properties or assets or (iii) subject to the governmental
filings and other matters referred to in Section 3.4(b), any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Lucent or any
of its Subsidiaries or their respective properties or assets, other than, in
-21-
the case of clauses (ii) and (iii), any such conflicts, violations, defaults,
rights, losses or Liens that individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
(b) No consent, approval, order or authorization of, action by, or
in respect of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Lucent or Acquisition in connection
with the execution and delivery of this Agreement by Lucent and Acquisition or
the execution and delivery of the Option Agreement by Lucent or the consummation
by Lucent and Acquisition of the transactions contemplated by this Agreement or
the consummation by Lucent of the transactions contemplated by the Option
Agreement, except for (i) the filing of a premerger notification and report form
by Lucent under the HSR Act and any applicable filings and approvals under
similar foreign antitrust laws and regulations; (ii) the filing with the SEC of
(A) the Lucent Registration Statement and (B) such reports under Section 13(a),
13(d), 15(d) or 16(a) of the Exchange Act as may be required in connection with
this Agreement and the Option Agreement and the transactions contemplated by
this Agreement and the Option Agreement; (iii) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware and appropriate
documents with the relevant authorities of other states in which Lucent is
qualified to do business; (iv) such filings with and approvals of the NYSE to
permit the shares of Lucent Common Stock that are to be issued in the Merger to
be listed on the NYSE; (v) filings with Governmental Entities to satisfy the
applicable requirements of state securities or "blue sky" laws and (vi) such
consents, approvals, orders or authorizations the failure of which to be made or
obtained individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect.
3.5. Litigation. Item 3.5 of the Lucent Disclosure Schedule sets
----------
forth (i) any actions, suits, arbitrations, legal or administrative proceedings
or investigations pending or, to the best knowledge of Lucent, threatened
against Lucent or any of its Subsidiaries; (ii) any judgment, order, writ,
injunction or decree of any court, governmental agency or arbitration tribunal
as to which any of the assets, properties or business of Lucent or any of its
Subsidiaries is subject; and (iii) any actions, suits, arbitrations or
proceedings as to which Lucent or any such Subsidiary is the plaintiff or Lucent
or any such Subsidiary is contemplating commencing legal action against any
other Person, in each case (i), (ii) and (iii) which could reasonably be
expected to have a Material Adverse Effect on Lucent, its Subsidiaries and
Acquisition taken as a whole.
3.6. SEC Documents; Undisclosed Liabilities. Lucent has filed all
--------------------------------------
required reports, schedules, forms, statements and other documents (including
exhibits and all other information incorporated therein) with the SEC since
October 1, 1998 (the "Lucent SEC Documents"). As of their respective dates, the
--------------------
Lucent SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Lucent SEC
Documents. Except to the extent that information contained in any Lucent SEC
Document has been revised or superseded by a later filed Lucent SEC Document,
none of the Lucent SEC Documents when filed contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
-22-
circumstances under which they were made, not misleading. The financial
statements of Lucent included in the Lucent SEC Documents comply as to form, as
of their respective dates of filing with the SEC, in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial position of Lucent
and its consolidated Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal recurring year-end audit
adjustments). Except for liabilities (i) reflected in such financial statements
or in the notes thereto, (ii) incurred in the ordinary course of business
consistent with past practice since the date of the most recent audited
financial statements included in the Lucent Filed SEC Documents, (iii) incurred
in connection with this Agreement or the Option Agreement or the transactions
contemplated hereby or thereby, or (iv) disclosed in Item 3.6 of the Lucent
Disclosure Schedule, neither Lucent nor any of its Subsidiaries has any
liabilities or obligations of any nature which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
3.7. Information Supplied. None of the information supplied or to
--------------------
be supplied by Lucent specifically for inclusion or incorporation by reference
in (i) the Lucent Registration Statement will, at the time the Lucent
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
or (ii) the Company Proxy Statement will, at the date it is first mailed to the
Company's stockholders or at the time of the Company Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Lucent Registration Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by
Lucent with respect to statements made or incorporated by reference therein
based on information supplied by the Company specifically for inclusion or
incorporation by reference in the Lucent Registration Statement.
3.8. Absence of Certain Changes. Except for liabilities incurred
--------------------------
in connection with this Agreement or the Option Agreement or the transactions
contemplated hereby or thereby and except as disclosed in the Lucent SEC
Documents filed and publicly available prior to the date of this Agreement (the
"Lucent Filed SEC Documents"), since September 30, 1999, Lucent and its
--------------------------
Subsidiaries have conducted their business only in the ordinary course, and
there has not been (i) any event or occurrence which could have a Material
Adverse Effect, (ii) except insofar as may have been or required by a change in
GAAP, any change in accounting methods, principles or practices by Lucent
materially affecting its assets, liabilities or business, (iii) any tax election
that individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect or any of its tax attributes or any settlement or
compromise of any material income tax liability, or (iv) any split,
-23-
combination or reclassification of any of Lucent's capital stock or any issuance
or the authorization of any issuance of any other securities in respect of, in
lieu of or in substitution, for shares of Lucent's capital stock, except for
issuances of Lucent Common Stock upon the exercise of outstanding stock options
or other rights to purchase or receive Lucent Common Stock granted under stock
compensation plans maintained by Lucent, various plans of companies acquired by
Lucent, and warrants issued by companies acquired by Lucent, in each case
awarded prior to the date hereof in accordance with their present terms.
3.9. Brokers. No broker, investment banker, financial advisor or
-------
other Person is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement and the Option Agreement based upon arrangements made by or on
behalf of Lucent.
3.10. Interim Operations of Acquisition. Acquisition was formed
---------------------------------
solely for the purpose of engaging in transactions of the type contemplated
hereby, has engaged in no other business activities and has conducted its
operations only as contemplated hereby.
3.11. Taxes. Neither Lucent nor any of its Subsidiaries has taken
-----
any action or knows of any fact, agreement, plan or other circumstance that
could reasonably be expected to prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code.
4. Conduct Pending Closing.
-----------------------
4.1. Conduct of Business Pending Closing. From the date hereof
-----------------------------------
until the Closing, the Company shall, and shall cause each of its Subsidiaries
to:
(a) maintain its existence in good standing;
(b) maintain the general character of its business and properties
and conduct its business in the ordinary and usual manner consistent with past
practices, except as expressly permitted by this Agreement;
(c) maintain business and accounting records consistent with past
practices; and
(d) use its reasonable best efforts (i) to preserve its business
intact, (ii) to keep available to the Company the services of its present
officers and employees, and (iii) to preserve for the Company or such Subsidiary
the goodwill of its suppliers, customers and others having material business
relations with the Company or such Subsidiary.
4.2. Prohibited Actions Pending Closing. Unless otherwise provided
----------------------------------
for herein or approved by Lucent in writing (which Lucent approval in the case
of any matters covered under
-24-
subsection (j) below cannot be unreasonably withheld), from the date hereof
until the Closing, the Company shall not, and shall not permit any of its
Subsidiaries to:
(a) amend or otherwise change its Certificate of Incorporation or
By-laws;
(b) issue or sell or authorize for issuance or sale (other than (i)
any issuance of Company Common Stock upon the exercise of any outstanding option
or warrant to purchase Company Common Stock which option or warrant was issued
prior to the date hereof in accordance with the terms of the relevant stock
option or warrant agreement, or (ii) the issuance of Company Common Stock
pursuant to the Option Agreement), or grant any options or make other agreements
with respect to, any shares of its capital stock or any other of its securities,
except for the issuance of stock options to new employee hires consistent with
past practice and for those provisions of the agreement with the Exchange Agent
which provisions are in furtherance of this Agreement;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise with respect to any
of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances, except (i) short-term borrowings incurred in the ordinary course of
business (or to refinance existing or maturing indebtedness) and (ii)
intercompany indebtedness between the Company and any of its Subsidiaries or
between Subsidiaries;
(f) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation, partnership,
other business organization or any division thereof or any material amount of
assets, (ii) enter into any contract or agreement other than in the ordinary
course of business consistent with past practice, (iii) authorize any capital
commitment which is in excess of $500,000 or capital expenditures which are, in
the aggregate, in excess of $2,000,000, or (iv) enter into or amend any
contract, agreement, commitment or arrangement with respect to any matter set
forth in Section 4.2(e) or this Section 4.2(f);
(g) mortgage, pledge or subject to Lien, any of its assets or
properties or agree to do so except for Permitted Liens;
(h) sell, lease, license, mortgage or otherwise encumber or subject
to any Lien or otherwise dispose of any of its properties or assets (including
securitizations), other than sales or licenses of finished goods in the ordinary
course of business consistent with past practice;
-25-
(i) assume, guarantee or otherwise become responsible for the
obligations of any other Person or agree to so do;
(j) enter into or agree to enter into any employment agreement;
(k) take any action, other than in the ordinary course of business
and consistent with past practice, with respect to accounting policies or
procedures (including, without limitation, procedures with respect to the
payment of accounts payable and collection of accounts receivables);
(l) make any material Tax election or settle or compromise any
material federal, state, local or foreign income Tax liability;
(m) settle or compromise any pending or threatened suit, action or
claim which is material or which relates to any of the transactions contemplated
by this Agreement;
(n) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business or in
accordance with their terms, of liabilities reflected or reserved against in the
most recently audited balance sheet (and the notes thereto) included in the
Company SEC Documents or subsequently incurred in the ordinary course of
business and consistent with past practice;
(o) except in connection with the sale of the Company's products in
the ordinary course of business and consistent with past practice, sell, assign,
transfer, license, sublicense, pledge or otherwise encumber any of the
Intellectual Property Rights of the Company or its Subsidiaries;
(p) except as required by law or contemplated hereby and except for
labor agreements negotiated in the ordinary course, enter into, adopt or amend
in any material respect or terminate any Company Benefit Plan or any other
agreement, plan or policy involving the Company or its Subsidiaries, and one or
more of its directors, officers or employees, or materially change any actuarial
or other assumption used to calculate funding obligations with respect to any
pension plan, or change the manner in which contributions to any pension plan
are made or the basis on which such contributions are determined;
(q) except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not materially increase
benefits or compensation expenses of the Company or its Subsidiaries, or as
contemplated hereby or by the terms of any employment agreement in existence on
the date hereof, increase the cash compensation of any director, executive
officer or other key employee or pay any benefit or amount not required by a
plan or arrangement as in effect on the date of this Agreement to any such
Person; provided that nothing contained herein shall prohibit the Company from
--------
paying 1999 bonuses that have been earned under its incentive bonus plans in
accordance with the terms of such plans as in effect on the date hereof
consistent with past practice; or
-26-
(r) announce an intention, commit or agree to do any of the
foregoing.
5. Additional Agreements.
---------------------
5.1. Access; Documents; Supplemental Information. (a) From and
-------------------------------------------
after the date hereof until the Closing, the Company shall afford, shall cause
its Subsidiaries to afford and, with respect to clause (ii) below, shall use its
reasonable best efforts to cause the independent certified public accountants
for the Company to afford, (i) to the officers, independent certified public
accountants, counsel and other representatives of Acquisition and Lucent, upon
reasonable notice, reasonable access during normal business hours to the
properties, books and records including tax returns filed and those in the
process of being prepared by the Company or any of its Subsidiaries and the
right to consult with the officers, employees, accountants, counsel and other
representatives of the Company or any of its Subsidiaries in order that
Acquisition and Lucent may have full opportunity to make such investigations as
they shall reasonably desire to make of the operations, properties, business,
financial condition and prospects of the Company and its Subsidiaries, (ii) to
the independent certified public accountants of Acquisition and Lucent,
reasonable access during normal business hours to the work papers and other
records of the accountants relating to the Company and its Subsidiaries, and
(iii) to Acquisition and Lucent and their representatives, such additional
financial and operating data and other information as to the properties,
operations, business, financial condition and prospects of the Company and its
Subsidiaries as Acquisition and Lucent shall from time to time reasonably
require.
(b) From the date of this Agreement through and including the
Closing, Acquisition, Lucent and the Company agree to furnish to each other
copies of any notices, documents, requests, court papers, or other materials
received from any governmental agency or any other third party with respect to
the transactions contemplated by this Agreement, except where it is obvious from
such notice, document, request, court paper or other material that the other
party was already furnished with a copy thereof.
(c) Except as required by law, the Company and Lucent shall not, and
shall not permit any of their respective Subsidiaries to, voluntarily take any
action that would, or that could reasonably be expected to, result in (i) any of
the representations and warranties of such party set forth in this Agreement or
the Option Agreement that are qualified as to materiality becoming untrue at the
Effective Time, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect at the Effective Time, or
(iii) any of the conditions to the Merger set forth in Section 6 not being
satisfied.
(d) The Company shall give prompt notice to Lucent, and Lucent shall
give prompt notice to the Company, of (i) the occurrence, or non-occurrence, of
any event which would be likely to cause (A) any representation or warranty
contained in this Agreement or the Option Agreement to be untrue or inaccurate
in any material respect or (B) any covenant, condition or agreement contained in
this Agreement or the Option Agreement not to be complied with or
-27-
satisfied; and (ii) any failure of the Company, Lucent or Acquisition, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided that the delivery of any
--------
notice pursuant to this Section 5.1(d) shall not limit or otherwise affect the
remedies available to the party receiving such notice.
(e) The Company shall deliver to Lucent, without charge, a copy of
any filing made by the Company with the SEC under the Exchange Act, including,
without limitation, any Form 10-Q, 8-K or 10-K, not later than five business
days after the date of such filing with the SEC.
(f) Lucent shall deliver to the Company, without charge, a copy of
any filing made by Lucent with the SEC under the Exchange Act, including,
without limitation, any Form 10-Q, 8-K or 10-K, not later than five business
days after the date of such filing with the SEC.
5.2. No Solicitation by the Company. (a) the Company shall not, nor
------------------------------
shall it permit any of its Subsidiaries to, nor shall it authorize or permit any
of its directors, officers or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it or any of
its Subsidiaries to, directly or indirectly through another person, (i) solicit,
initiate or encourage (including by way of furnishing information), or take any
other action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal (as
defined below) or (ii) participate in any discussions or negotiations regarding
any Takeover Proposal; provided, however, that if, at any time prior to the date
of the Company Stockholders Meeting (the "Applicable Period"), the Board of
-----------------
Directors of the Company determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's stockholders under applicable law, the Company
and its representatives may, in response to a Superior Proposal which was not
solicited by it or which did not otherwise result from a breach of this Section
5.2(a), and subject to providing prior written notice of its decision to take
such action to Lucent and compliance with Section 5.2(c), (x) furnish
information with respect to the Company and its Subsidiaries to any person
making a Superior Proposal pursuant to a customary confidentiality agreement (as
determined by the Company after consultation with its outside counsel) and (y)
participate in discussions or negotiations regarding such Superior Proposal.
For purposes of this Agreement, "Takeover Proposal" means any inquiry, proposal
-----------------
or offer from any person relating to any direct or indirect acquisition or
purchase of 15% or more of the assets of the Company and its Subsidiaries, taken
as a whole, or 15% or more of any class or series of equity securities of the
Company or any of its Subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 15% or more of any
class or series of equity securities of the Company or any of its Subsidiaries,
or any merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its Subsidiaries, other than the transactions contemplated by this Agreement.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw or modify, or propose publicly to withdraw or modify,
in a manner adverse to
-28-
Lucent, the approval or recommendation by such Board of Directors or such
committee of the Merger or this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any Takeover Proposal, or (iii) approve or
recommend, or propose to approve or recommend, or execute or enter into, any
letter of intent, agreement in principle, merger agreement, acquisition
agreement, option agreement or other similar agreement or propose publicly or
agree to do any of the foregoing (each, an "Acquisition Agreement") related to
---------------------
any Takeover Proposal, other than any such agreement entered into concurrently
with a termination pursuant to the next sentence in order to facilitate such
action. Notwithstanding the foregoing, during the Applicable Period, in response
to a Superior Proposal which was not solicited by the Company and which did not
otherwise result from a breach of Section 5.2(a), if the Board of Directors of
the Company determines in good faith, after consultation with outside counsel,
that it is necessary to do so in order to comply with its fiduciary duties to
the Company's stockholders under applicable law, the Board of Directors of the
Company may (subject to this and the following sentence) terminate this
Agreement (and concurrently with or after such termination, if it so chooses,
cause the Company to enter into any Acquisition Agreement with respect to any
Superior Proposal), but only at a time that is during the Applicable Period and
is after the tenth business day following Lucent's receipt of written notice
advising Lucent that the Board of Directors of the Company is prepared to accept
a Superior Proposal, specifying the material terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal. For
purposes of this Agreement, a "Superior Proposal" means any proposal made by a
-----------------
third party to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of the Company Common Stock then outstanding
or all or substantially all the assets of the Company and otherwise on terms
which the Board of Directors of the Company determines in its good faith
judgment (based on the advice of a financial advisor of nationally recognized
reputation) to be more favorable to the Company's stockholders than the Merger
and for which financing, to the extent required, is then committed or which, in
the good faith judgment of the Board of Directors of the Company, is reasonably
capable of being obtained by such third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.2, the Company shall promptly (and no
later than 48 hours) advise Lucent orally and in writing of any request for
information or of any Takeover Proposal, the material terms and conditions of
such request or Takeover Proposal and the identity of the Person making such
request or Takeover Proposal. The Company will keep Lucent informed of the
status and material terms and conditions (including amendments or proposed
amendments) of any such request or Takeover Proposal.
(d) Nothing contained in this Section 5.2 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Board of Directors
of the Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its obligations under applicable law; provided, that,
--------
except
-29-
as expressly permitted by this Section 5.2, neither the Company nor its Board of
Directors nor any committee thereof shall withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to this Agreement or
the Merger or approve or recommend, or propose publicly to approve or recommend,
a Takeover Proposal.
5.3. Preparation of the Lucent Registration Statement and Company
------------------------------------------------------------
Proxy Statement; Company Stockholders Meeting. (a) As soon as practicable
- ---------------------------------------------
following the date of this Agreement, the Company shall prepare and file with
the SEC the Company Proxy Statement and Lucent shall prepare and file with the
SEC the Lucent Registration Statement, in which the Company Proxy Statement will
be included as a prospectus. Each of the Company and Lucent shall use its
reasonable best efforts to have the Lucent Registration Statement declared
effective under the Securities Act as promptly as practicable after such filing.
The Company will use its reasonable best efforts to cause the Company Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after the Lucent Registration Statement is declared effective under the
Securities Act. Lucent shall also take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified or to file a
general consent to service of process) required to be taken under any applicable
state securities laws in connection with the issuance of Lucent Common Stock in
the Merger and the Company shall furnish all information concerning the Company
and the holders of Company Common Stock as may be reasonably requested in
connection with any such action. No filing of, or amendment or supplement to,
the Lucent Registration Statement will be made by Lucent, or the Company Proxy
Statement will be made by the Company, without providing the other party the
opportunity to review and comment thereon. Lucent will advise the Company,
promptly after it receives notice thereof, of the time when the Lucent
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of the Lucent Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, or any request by the SEC for amendment of the
Lucent Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information. The Company will inform Lucent,
promptly after it receives notice thereof, of any request by the SEC for the
amendment of the Company Proxy Statement or comments thereon and responses
thereto or requests by the SEC for additional information. If at any time prior
to the Effective Time any information relating to the Company or Lucent, or any
of their respective affiliates, officers or directors, should be discovered by
the Company or Lucent which should be set forth in an amendment or supplement to
any of the Lucent Registration Statement or the Company Proxy Statement, so that
any of such documents would not include any misstatement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, the party
that discovers such information shall promptly notify the other parties hereto
and an appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company.
(b) The Company shall, as soon as practicable following the date of
this Agreement, establish a record date (which will be as soon as practicable
following the date of this Agreement) for, duly call, give notice of, convene
and hold a meeting of its stockholders (the
-30-
"Company Stockholders Meeting") solely for the purpose of obtaining the Company
----------------------------
Stockholder Approval. The Company shall, through its Board of Directors,
recommend to its stockholders the approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby. Without limiting the
generality of the foregoing but subject to its right to terminate this Agreement
pursuant to Section 5.2(b), the Company agrees that its obligations pursuant to
the first sentence of this Section 5.3(b) shall not be affected by the
commencement, public proposal, public disclosure or communication to the Company
of any Takeover Proposal.
5.4. Letter of the Company's Accountants; Letter of Lucent's
-------------------------------------------------------
Accountants. (a) The Company shall use its reasonable best efforts to cause
- -----------
its independent public accountants to deliver to Lucent two letters from the
Company's independent public accountants, one dated a date within two business
days before the date on which the Lucent Registration Statement shall become
effective and one dated a date within two business days before the Closing Date,
each addressed to Lucent, in form and substance reasonably satisfactory to
Lucent and customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Lucent Registration Statement.
(b) Lucent shall use its reasonable best efforts to cause its
independent public accountants to deliver to the Company two letters from
Lucent's independent public accountants, one dated a date within two business
days before the date on which the Lucent Registration Statement shall become
effective and one dated a date within two business days before the Closing Date,
each addressed to the Company, in form and substance reasonably satisfactory to
the Company and customary in scope and substance for comfort letters delivered
by independent public accountants in connection with registration statements
similar to the Lucent Registration Statement.
5.5. Reasonable Best Efforts. (a) Upon the terms and subject to
-----------------------
the conditions set forth in this Agreement, each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger and the other
transactions contemplated by this Agreement and the Option Agreement, including
(i) the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings and the taking of all steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Entity, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the Option Agreement or the consummation of the transactions contemplated by
this Agreement or the Option Agreement, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, this Agreement and the Option Agreement.
-31-
(b) In connection with and without limiting the foregoing, the
Company and Lucent shall (i) take all action reasonably necessary to ensure that
no state takeover statute or similar statute or regulation is or becomes
applicable to the Merger, this Agreement, the Option Agreement or any of the
other transactions contemplated by this Agreement or the Option Agreement and
(ii) if any state takeover statute or similar statute or regulation becomes
applicable to the Merger, this Agreement, the Option Agreement or any other
transaction contemplated by this Agreement or the Option Agreement, take all
action reasonably necessary to ensure that the Merger and the other transactions
contemplated by this Agreement and the Option Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and the
Option Agreement and otherwise to minimize the effect of such statute or
regulation on the Merger and the other transactions contemplated by this
Agreement and the Option Agreement.
5.6. Stock Options. (a) As soon as practicable following the date
-------------
of this Agreement, the Board of Directors of the Company (or, if appropriate,
any committee administering the Company Stock Plans) shall adopt such
resolutions or take such other actions as may be required to effect the
following:
(i) adjust the terms of all outstanding Company Stock Options
granted under the Company Stock Plans, whether vested or unvested, as
necessary to provide that, at the Effective Time, each Company Stock Option
outstanding immediately prior to the Effective Time shall be amended and
converted into an option to acquire, on the same terms and conditions as
were applicable under such Company Stock Option, the number of shares of
Lucent Common Stock (rounded down to the nearest whole share) equal to (A)
the number of shares of Company Common Stock subject to such Company Stock
Option immediately prior to the Effective Time multiplied by (B) the
Exchange Ratio, at an exercise price per share of Lucent Common Stock
(rounded to the nearest one-hundredth of a cent) equal to (x) the exercise
price per share of such Company Common Stock immediately prior to the
Effective Time divided by (y) the Exchange Ratio (each, as so adjusted, an
"Adjusted Option"); and
---------------
(ii) make such other changes to the Company Stock Plans as the
Company and Lucent may agree are appropriate to give effect to the Merger,
including as provided in Section 5.7.
(b) As soon as practicable after the Effective Time, Lucent shall
deliver to the holders of Company Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective Company Stock Plans and
the agreements evidencing the grants of such Company Stock Options and that such
Company Stock Options and agreements shall be assumed by Lucent and shall
continue in effect on the same terms and conditions (subject to the adjustments
required by this Section 5.6 after giving effect to the Merger).
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(c) A holder of an Adjusted Option may exercise such Adjusted Option
in whole or in part in accordance with its terms by delivering a properly
executed notice of exercise to Lucent, together with the consideration therefor
and applicable withholding taxes.
(d) Except as otherwise contemplated by this Section 5.6 and except
to the extent required under the respective terms of the Company Stock Options,
all restrictions or limitations on transfer and vesting with respect to Company
Stock Options awarded under the Company Stock Plans or any other plan, program
or arrangement of the Company or any of its Subsidiaries, to the extent that
such restrictions or limitations shall not have already lapsed, shall remain in
full force and effect with respect to such options after giving effect to the
Merger and the assumption by Lucent as set forth above.
5.7. Company Stock Plans. At the Effective Time, by virtue of the
-------------------
Merger, the Company Stock Plans and the Company Stock Options granted thereunder
shall be assumed by Lucent, with the result that all obligations of the Company
under the Company Stock Plans, including with respect to awards outstanding at
the Effective Time under each Company Stock Plan, shall be obligations of Lucent
following the Effective Time; provided, that in the case of any Company Stock
--------
Option to which Section 421 of the Code applies by reason of its qualification
under Section 422 or Section 423 of the Code, the option price, number of shares
purchasable pursuant to such Company Stock Option and the terms and conditions
of exercise of such Company Stock Option shall be determined in order to comply
with Section 424 of the Code. Prior to the Effective Time, Lucent shall take
all necessary actions (including, if required to comply with Section 162(m) of
the Code (and the regulations thereunder) or applicable law or rule of the NYSE,
obtaining the approval of its stockholders at the next regularly scheduled
annual meeting of Lucent following the Effective Time) for the assumption of the
Company Stock Plans, including the reservation, issuance and listing of Lucent
Common Stock in a number at least equal to the number of shares of Lucent Common
Stock that will be subject to the Adjusted Options. As soon as practicable
following the Effective Time, Lucent shall prepare and file with the SEC a
registration statement on Form S-8 (or another appropriate form) registering a
number of shares of Lucent Common Stock determined in accordance with the
preceding sentence. Such registration statement shall be kept effective (and
the current status of the prospectus or prospectuses required thereby shall be
maintained) at least for so long as the Adjusted Options or any unsettled awards
granted under the Company Stock Plans after the Effective Time remain
outstanding.
5.8. Employee Benefit Plans; Existing Agreement. (a) As soon as
------------------------------------------
practicable after the Effective Time (the "Benefits Date"), Lucent shall
-------------
provide, or cause to be provided, employee benefit plans, programs and
arrangements to employees of the Company that are the same as those made
generally available to non-represented employees of Lucent who are hired by
Lucent after December 31, 1999. From the Effective Time to the Benefits Date
(which the parties acknowledge may occur on different dates with respect to
different plans, programs or arrangements of the Company) (the "Continuation
------------
Period"), Lucent shall provide, or cause to be provided, the employee benefit
- ------
plans, programs and arrangements of the Company provided to employees of the
Company as of the date hereof.
-33-
(b) With respect to each benefit plan, program, practice, policy or
arrangement maintained by Lucent (the "Lucent Plans") in which employees of the
------------
Company subsequently participate, for purposes of determining vesting and
entitlement to benefits, including for severance benefits and vacation
entitlement (but not for accrual of pension benefits), service with the Company
(or predecessor employers to the extent the Company provides past service
credit) shall be treated as service with Lucent; provided, that such service
--------
shall not be recognized to the extent that such recognition would result in a
duplication of benefits. Such service also shall apply for purposes of
satisfying any waiting periods, evidence of insurability requirements, or the
application of any pre-existing condition limitations. Each Lucent Plan shall
waive pre-existing condition limitations to the same extent waived under the
applicable Company Benefit Plan. Company Employees shall be given credit for
amounts paid under a corresponding benefit plan during the same period for
purposes of applying deductibles, copayments and out-of-pocket maximums as
though such amounts had been paid in accordance with the terms and conditions of
the Lucent Plan for the plan year in which the Effective Time occurs.
5.9. Indemnification. (a) From and after the Effective Time,
---------------
Lucent shall, or shall cause the Surviving Corporation to, fulfill and honor in
all respects (i) the obligations of the Company to indemnify each Person who is
or was a director or officer (an "Indemnified Party") of the Company or any of
-----------------
its Subsidiaries pursuant to any indemnifications provision of the Company's
Certificate of Incorporation or By-laws as each is in effect on the date hereof
and (ii) any indemnification agreements of the Company listed in Item 5.9(a) of
the Company Disclosure Schedule (as each is in effect on the date hereof), the
existence of which does not constitute a breach of this Agreement, shall be
assumed by the Surviving Corporation in the Merger, without further action, as
of the Effective Time and shall survive the Merger and shall continue in full
force and effect in accordance with their terms, and Lucent shall cause the
Surviving Corporation to honor all such rights.
(b) For a period of six years after the Effective Time, Lucent shall
cause to be maintained in effect the current officers' and directors' liability
insurance maintained by the Company with respect to the Indemnified Parties
(provided that Lucent may substitute therefor policies of at least the same
--------
coverage and amounts containing terms and conditions which are no less
advantageous to the Indemnified Parties than such existing insurance) covering
acts or omissions occurring prior to the Effective Time; provided, that Lucent
--------
shall not be required in order to maintain or procure such coverage to pay an
annual premium in excess of 200% of the current annual premium paid by the
Company for its existing coverage (the "Cap"); and provided, further, that if
--- -------- -------
existing coverage cannot be maintained or equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of the
Cap, Lucent shall only be required to obtain as much coverage as can be obtained
by paying an annual premium equal to the Cap. The current annual premium paid
by the Company for its existing coverage is set forth in Item 5.9(b) of the
Company Disclosure Schedule.
-34-
(c) This Section 5.9 shall survive the closing of all the
transactions contemplated hereby, is intended to benefit the Indemnified Parties
and their respective heirs and personal representative (each of which shall be
entitled to enforce this Section 5.9 against Lucent and the Surviving
Corporation, as the case may be, as a third-party beneficiary of this
Agreement).
5.10. Fees and Expenses. (a) Except as provided in this Section
-----------------
5.10, all fees and expenses incurred in connection with the Merger, this
Agreement, the Option Agreement and the transactions contemplated by this
Agreement and the Option Agreement shall be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated, except that each of
Lucent and the Company shall bear and pay one-half of (i) the costs and expenses
incurred in connection with the filing, printing and mailing of the Lucent
Registration Statement, the Company Proxy Statement (including SEC filing fees)
and (ii) the filing fees for the pre-merger notification and report forms under
the HSR Act.
(b) In the event that (i) a bona fide Takeover Proposal shall have
been made directly to the stockholders of the Company generally or shall have
otherwise become publicly known or any Person shall have publicly announced an
intention (whether or not conditional) to make a Takeover Proposal and
thereafter this Agreement is terminated by either Lucent or the Company pursuant
to Section 10(b)(i) or 10(c), or (ii) this Agreement is terminated by the
Company pursuant to Section 10(e) or (iii) this Agreement is terminated by
Lucent pursuant to Section 10(d), then the Company shall promptly, but in no
event later than the date of such termination, pay Lucent a fee equal to $90
million (the "Termination Fee"), payable by wire transfer of same day funds;
---------------
provided, that no Termination Fee shall be payable to Lucent pursuant to clause
- --------
(i) of this Section 5.10(b) unless within nine (9) months of such termination
the Company or any of its Subsidiaries enters into any definitive agreement with
respect to, or consummates, any Takeover Proposal. The Company acknowledges
that the agreements contained in this Section 5.10(b) are an integral part of
the transactions contemplated by this Agreement and that, without these
agreements, Lucent would not enter into this Agreement. Accordingly, if the
Company fails promptly to pay the amount due pursuant to this Section 5.10(b),
and, in order to obtain such payment, Lucent commences a suit which results in a
judgment against the Company for the fee set forth in this Section 5.10(b), the
Company shall pay to Lucent its costs and expenses (including attorneys' fees
and expenses) in connection with such suit, together with interest on the amount
of the fee at the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made.
5.11. Public Announcements. Lucent and the Company will consult
--------------------
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Merger and the Option Agreement, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as either party may determine is required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange or national trading system. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement and the Option Agreement shall be in the form heretofore
agreed to by the parties.
-35-
5.12. Affiliates. As soon as practicable after the date hereof,
----------
the Company shall deliver to Lucent a letter identifying all Persons who are, at
the time this Agreement is submitted for adoption by the stockholders of the
Company, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act. The Company shall use its reasonable best efforts to cause each
such Person to deliver to Lucent as of the Closing Date, a written agreement
substantially in the form attached as Exhibit C hereto.
---------
5.13. Listings. Lucent shall use its reasonable best efforts to
--------
cause the Lucent Common Stock issuable in the Merger to be approved for listing
on the NYSE, subject to official notice of issuance, as promptly as practicable
after the date hereof, and in any event prior to the Closing Date. The Company
shall use its reasonable best efforts to cause the shares of Company Common
Stock to be issued pursuant to the Option Agreement to be approved for listing
on Nasdaq, subject to official notice of issuance, as promptly as practicable
after the date hereof, and in any event prior to the Closing Date.
5.14. Stockholder Litigation. The Company shall give Lucent the
----------------------
opportunity to participate in the defense of any stockholder litigation against
the Company and/or its directors relating to the transactions contemplated by
this Agreement and the Option Agreement.
5.15. Reorganization. Each of Lucent, Acquisition and the Company
--------------
shall not take any action and shall not fail to take any action which action or
failure to act would prevent, or would be likely to prevent, the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code.
5.16. Company Rights Agreement. (a) The Board of Directors of the
------------------------
Company shall take all further action (in addition to that referred to in
Section 2.22) requested in writing by Lucent (including redeeming the Company
Rights immediately prior to the Effective Time of the Merger or amending the
Company Rights Agreement) in order to render the Company Rights inapplicable to
the Merger and the other transactions contemplated by this Agreement and the
Option Agreement. Except as requested in writing by Lucent or as permitted by
Section 5.16(b), prior to the Company Stockholders Meeting, the Board of
Directors of the Company shall not (i) amend the Company Rights Agreement or
(ii) take any action with respect to, or, except as specifically permitted by
Section 5.16(b), make any determination under, the Company Rights Agreement
(including a redemption of the Company Rights).
(b) If, to the extent permitted by Section 5.2, the Board of
Directors of the Company approves or recommends a Superior Proposal, the Company
may take appropriate action under the Company Rights Agreement solely in order
to render the Company Rights inapplicable to such Superior Proposal; provided,
--------
that the foregoing shall not permit the Company to make any determination under,
or take any action with respect to, the Company Rights Agreement in order to
render the Company Rights applicable to the Merger or any of the other
transaction contemplated by this Agreement or the Option Agreement, or to redeem
the Company Rights.
-36-
6. Conditions Precedent.
--------------------
6.1. Conditions Precedent to Each Party's Obligation to Effect the
-------------------------------------------------------------
Merger. The respective obligations of each party hereto to effect the Merger
- ------
shall be subject to the fulfillment or satisfaction, prior to or on the Closing
Date of each of the following conditions precedent:
(a) Stockholder Approval. The Company Stockholder Approval shall
--------------------
have been obtained.
(b) HSR Act. The waiting period (and any extension thereof)
-------
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) Representation Letters. Each of the Company and Lucent shall
----------------------
have executed and delivered a letter of representation relating to certain tax
matters substantially in the form of Exhibits D-1 and D-2.
------------ ---
(d) No Litigation. No judgment, order, decree, statute, law,
-------------
ordinance, rule or regulation, entered, enacted, promulgated, enforced or issued
by any court or other Governmental Entity of competent jurisdiction or other
legal restraint or prohibition (collectively, "Restraints") shall be in effect,
----------
and there shall not be pending any suit, action or proceeding by any
Governmental Entity (i) preventing the consummation of the Merger or (ii) which
otherwise is reasonably likely to have a Material Adverse Effect on the Company
or Lucent, as applicable; provided, that each of the parties shall have used its
--------
reasonable best efforts to prevent the entry of any such Restraints and to
appeal as promptly as possible any such Restraints that may be entered.
(e) Lucent Registration Statement. The Lucent Registration Statement
-----------------------------
shall have become effective in accordance with the provisions of the Securities
Act. No stop order suspending the effectiveness of the Lucent Registration
Statement shall have been issued by the SEC and no proceedings for that purpose
shall have been initiated.
(f) Stock Exchange Listing. The shares of Lucent Common Stock
----------------------
issuable in accordance with the Merger shall have been authorized for listing on
the NYSE, subject to official notice of issuance.
6.2. Conditions Precedent to Obligations of Acquisition and Lucent.
-------------------------------------------------------------
All obligations of Acquisition and Lucent under this Agreement are subject to
the fulfillment or satisfaction, prior to or on the Closing Date, of each of the
following additional conditions precedent:
(a) Performance of Obligations; Representations and Warranties. The
----------------------------------------------------------
Company shall have performed and complied in all material respects with all
agreements and conditions contained in this Agreement that are required to be
performed or complied with by it prior to or at the Closing. Each of the
Company's representations and warranties contained in Section 2 of this
-37-
Agreement shall be true and correct as of the date hereof and as of the Closing
with the same effect as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) does not have, and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Lucent and Acquisition shall have received a
certificate dated the Closing Date and signed by the Chairman, President or a
Vice-President of the Company, certifying that, the conditions specified in this
Section 6.2(a) have been satisfied.
(b) Tax Opinion. Lucent shall have received a written opinion from
-----------
Sidley & Austin, counsel to Lucent, on the date on which the Form S-4 is
declared effective by the SEC and on the Closing Date, in each case dated as of
such respective date, to the effect that on the basis of certain facts,
representations and assumptions set forth in such opinion, the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. In rendering such opinion, such counsel shall be
entitled to rely upon representation letters signed by officers of Lucent,
Acquisition and the Company substantially in the forms attached as Exhibits D-1
------------
and D-2 to this Agreement.
---
(c) Non-Disclosure and Non-Competition Agreements. Each of the
---------------------------------------------
individuals listed on Item 6.2(c) of the Company Disclosure Schedule shall have
entered into the Non-Disclosure and Non-Competition Agreements with the
Surviving Corporation and Lucent, each substantially in the form of Exhibit E
---------
hereto, and such agreements shall be in full force and effect.
(d) Affiliates. Lucent shall have received from each Person named in
----------
the letter referred to in Section 5.12, an executed copy of an agreement
substantially in the form of Exhibit C.
---------
(e) Company Rights Agreement. The Company Rights shall not have
------------------------
become nonredeemable, exercisable, distributable or triggered pursuant to the
terms of the Company Rights Agreement.
6.3. Conditions Precedent to the Company's Obligations. All
-------------------------------------------------
obligations of the Company under this Agreement are subject to the fulfillment
or satisfaction, prior to or on the Closing Date, of each of the following
additional conditions precedent:
(a) Performance of Obligations; Representations and Warranties.
----------------------------------------------------------
Acquisition and Lucent shall have performed and complied in all material
respects with all agreements and conditions contained in this Agreement that are
required to be performed or complied with by them prior to or at the Closing.
Each of the representations and warranties of Acquisition and Lucent contained
in Section 3 of this Agreement shall be true and correct as of the date hereof
and as of the Closing with the same effect as if made at and as of such time
(except to the extent expressly made as of an earlier date, in which case as of
such date), except where the failure of such representations and warranties to
be so true and correct (without giving effect to any limitation as to
"materiality"
-38-
or "Material Adverse Effect" set forth therein) does not have, and could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Lucent. The Company shall have received certificates dated the
Closing Date and signed by the President or a Vice-President of Acquisition and
an authorized signatory of Lucent, certifying that the conditions specified in
this Section 6.3(a) have been satisfied.
(b) Tax Opinion. The Company shall have received a written opinion
-----------
from Latham & Watkins, counsel to the Company, on the date on which the Form S-4
is declared effective by the SEC and on the Closing Date, in each case dated as
of such respective date, to the effect that on the basis of certain facts,
representations and assumptions set forth in such opinion, the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. In rendering such opinion, such counsel shall be
entitled to rely upon representation letters signed by officers of Lucent,
Acquisition and the Company substantially in the forms attached as Exhibits D-1
------------
and D-2 to this Agreement.
---
6.4 Frustration of Closing Conditions. None of the Company, Lucent
---------------------------------
or Acquisition may rely on the failure of any condition set forth in Sections
6.1, 6.2 or 6.3, as the case may be, to be satisfied if such failure was caused
by such party's failure to use reasonable efforts to consummate the Merger and
the other transactions contemplated by this Agreement and the Option Agreement,
as required by and subject to Section 5.5
7. Non-Survival of Representation and Warranties. None of the
---------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section shall
not limit any covenant or agreement by the parties which expressly requires
performance after the Effective Time.
8. Contents of Agreement; Parties in Interest; etc. This Agreement and
-----------------------------------------------
the agreements referred to or contemplated herein and the letter agreement dated
January 10, 2000, concerning confidentiality (the "Confidentiality Agreement")
-------------------------
set forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby, and, except as set forth in this Agreement,
such other agreements and the Exhibits hereto and the Confidentiality Agreement,
there are no representations or warranties, express or implied, made by any
party to this Agreement with respect to the subject matter of this Agreement and
the Confidentiality Agreement. Except for the matters set forth in the
Confidentiality Agreement, any and all previous agreements and understandings
between or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement and the agreements referred to
or contemplated herein.
9. Assignment and Binding Effect. This Agreement may not be assigned by
-----------------------------
either party hereto without the prior written consent of the other party;
provided, that Acquisition may assign its rights and obligations under this
- --------
Agreement to any directly or indirectly wholly-owned Subsidiary of Lucent, upon
written notice to the Company if the assignee shall assume the obligations of
Acquisition hereunder and Lucent shall remain liable for its obligations
hereunder. All the terms and
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provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto.
10. Termination. This Agreement may be terminated, and the Merger may
-----------
be abandoned at any time prior to the Effective Time whether before or after the
approval and adoption of this Agreement and the transactions contemplated hereby
by the stockholders of the Company or the stockholders of Acquisition:
(a) by the agreement of each of the Board of Directors of Lucent,
Acquisition and the Company;
(b) by Lucent, Acquisition or the Company, if either: (i) the
Effective Time shall not have occurred by December 31, 2000; provided that the
--------
right to terminate this Agreement under this Section 10(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date; or (ii) any court of competent
jurisdiction in the United States or other United States governmental authority
shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable;
(c) by Lucent, Acquisition or the Company, if the Company
Stockholder Approval shall not have been obtained at a Company Stockholders
Meeting duly convened therefor or at any adjournment or postponement thereof;
(d) by Lucent, if the Company or any of its directors or officers
shall participate in discussions or negotiations or furnish information in
breach of Section 5.2;
(e) by the Company in accordance with Section 5.2(b); provided that,
--------
in order for the termination of this Agreement pursuant to this paragraph (e) to
be deemed effective, the Company shall have complied with all provisions of
Section 5.2, including the notice provisions therein, and with applicable
requirements, including the payment of the Termination Fee;
(f) by the Company, in the event Lucent or Acquisition materially
breaches its obligations under this Agreement, unless such breach is cured
within 30 days after notice to Lucent by the Company; or
(g) by Lucent or Acquisition, in the event the Company materially
breaches its obligations under this Agreement unless such breach is cured within
30 days after notice by Lucent or Acquisition.
11. Definitions. As used in this Agreement the terms set forth below
-----------
shall have the following meanings:
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(a) "Affiliate" of a Person means any other Person who directly or
---------
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, such Person. As used in this definition, "control"
-------
means the possession of the power, directly or indirectly, to direct or cause
the direction of the management and policies of a Person whether through the
ownership of voting securities, by contract or otherwise.
(b) "Benefit Plan" shall mean any bonus, pension, profit sharing,
-------------
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other material plan, arrangement or
understanding (whether or not legally binding) providing material benefits to
any current or former employee, officer or director of the Company.
(c) "best knowledge" of any Person which is not an individual means,
--------------
with respect to any specific matter, the knowledge, after due inquiry, of such
Person's executive officers and any other officer or persons having primary
responsibility for such matter.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(e) "Environmental Laws" shall mean all applicable federal, state,
------------------
local or foreign laws, rules and regulations, orders, decrees, judgments,
permits, filings and licenses relating (i) to protection and clean-up of the
environment and activities or conditions related thereto, including those
relating to the generation, handling, disposal, transportation or release of
Hazardous Substances and (ii) the health or safety of employees in the workplace
environment, all as amended from time to time, and shall also include any common
law theory based on nuisance, trespass, negligence or other tortious conduct.
(f) "Exchange Agent" shall mean The Bank of New York or another bank
--------------
or trust company designated as the exchange agent by Lucent (which designation
shall be reasonably acceptable to the Company).
(g) "GAAP" shall mean generally accepted accounting principles.
----
(h) "Hazardous Substances" shall mean any and all hazardous and
--------------------
toxic substances, wastes or materials, any pollutants, contaminants, or
dangerous materials (including, but not limited to, polychlorinated biphenyls,
PCBs, friable asbestos, volatile and semi-volatile organic compounds, oil,
petroleum products and fractions, and any materials which include hazardous
constituents or become hazardous, toxic, or dangerous when their composition or
state is changed), or any other similar substances or materials which are
included under or regulated by any Environmental Laws.
(i) "Liens" shall mean any mortgage, pledge, lien, security
-----
interest, conditional or installment sale agreement, encumbrance, charge or
other claims of third parties of any kind.
-41-
(j) "Material Adverse Effect" on a Person shall mean, unless
-----------------------
otherwise specified, any condition or event that: (i) has a material adverse
effect on the assets, business, financial condition or results of operations of
such party and its Subsidiaries, taken as a whole, other than any condition or
event (A) relating to the economy in general, (B) relating to the industries in
which such party operates in general, (C) arising out of or resulting from
actions contemplated by the parties in connection with, or which is attributable
to, the announcement of this Agreement and the transactions contemplated hereby
or (D) in the case of the Company, litigation commenced or threatened against
the Company or any member of its Board of Directors in respect of this
Agreement; (ii) materially impairs the ability of such Person to perform its
obligations under this Agreement or the Option Agreement; or (iii) prevents or
materially delays the consummation of transactions contemplated under this
Agreement.
(k) "Permitted Liens" shall mean (i) Liens for taxes, assessments,
---------------
or similar charges, incurred in the ordinary course of business that are not yet
due and payable or are being contested in good faith; (ii) pledges or deposits
made in the ordinary course of business; (iii) Liens of mechanics, materialmen,
warehousemen or other like Liens securing obligations incurred in the ordinary
course of business that are not yet due and payable or are being contested in
good faith; and (iv) similar Liens and encumbrances which are incurred in the
ordinary course of business and which do not in the aggregate materially detract
from the value of such assets or properties or materially impair the use thereof
in the operation of such business.
(l) "Person" shall mean any individual, corporation, partnership,
------
limited partnership, limited liability company, trust, association or entity or
government agency or authority.
(m) "reasonable best efforts" shall mean prompt, substantial and
-----------------------
persistent efforts as a prudent Person desirous of achieving a result would use
in similar circumstances; provided that the Company, Lucent or Acquisition, as
--------
applicable, shall be required to expend only such resources as are commercially
reasonable in the applicable circumstances.
(n) "Subsidiary" of a Person shall mean any corporation,
----------
partnership, joint venture or other entity in which such Person (i) owns,
directly or indirectly, 50% or more of the outstanding voting securities or
equity interests or (ii) is a general partner.
(o) "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
--- ----- -------
shall include all (i) federal, state, local or foreign net income, gross income,
gross receipts, windfall profit, severance, property, production, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, value-added, transfer, stamp, or environmental tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, addition
to tax or additional amount imposed by any governmental authority, (ii)
liability for the payment of any amounts described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group and (iii)
liability for the payment of any amounts as a result of being party to any tax
sharing
-42-
agreement or as a result of any express or implied obligation to indemnify any
other Person with respect to the payment of any amounts of the type described in
clause (i) or (ii).
(p) "Tax Return" shall mean any return, report or similar statement
----------
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
12. Notices. Any notice, request, demand, waiver, consent, approval, or
-------
other communication which is required or permitted to be given to any party
hereunder shall be in writing and shall be deemed given only if delivered to the
party personally or sent to the party by facsimile transmission (promptly
followed by a hard-copy delivered in accordance with this Section 12) or by
registered or certified mail (return receipt requested), with postage and
registration or certification fees thereon prepaid, addressed to the party at
its address set forth below:
If to Acquisition or Lucent:
---------------------------
Lucent Technologies Inc.
Microelectronics and Communications Technologies Group
2 Oak Way
Berkley Heights, New Jersey 07920-2332
Att: President
Telephone No: separately supplied
Facsimile No: separately supplied
with copies to:
Lucent Technologies Inc.
600 Mountain Avenue
Room 6A 311
Murray Hill, NJ 07974
Att: Pamela F. Craven
Vice President and Secretary
Telephone No: separately supplied
Facsimile No: separately supplied
If to the Company:
-----------------
Ortel Corporation
2015 West Chestnut Street
Alhambra, California 91803
Att: President and Chief Executive Officer
Telephone No: separately supplied
Facsimile No: separately supplied
-43-
with a copy to:
Latham & Watkins
650 Town Center Drive, 20/th/ Floor
Costa Mesa, California 92626
Att: Patrick T. Seaver, Esq.
Telephone No: separately supplied
Facsimile No: separately supplied
or to such other address or Person as any party may have specified in a notice
duly given to the other party as provided herein. Such notice, request, demand,
waiver, consent, approval or other communication will be deemed to have been
given as of the date so delivered, telegraphed or mailed.
13. Amendment. This Agreement may be amended, modified or supplemented
---------
at any time before or after the Company Stockholder Approval, provided that
--------
after any such approval there shall not be made any amendment that by Law
requires further approval by the stockholders of the Company or the approval of
the stockholders of Lucent without the further approval of such stockholders.
Any amendment, modification or revision of this Agreement and any waiver of
compliance or consent with respect hereto shall be effective only by a written
instrument executed by each of the parties hereto.
14. Extensions; Waiver. At any time prior to the Effective Time, a
------------------
party may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties of the other parties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 13, waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute shall not constitute a waiver of such rights.
15. Governing Law. This Agreement shall be governed by and interpreted
-------------
and enforced in accordance with the laws of the State of New York as applied to
contracts made and fully performed in such state, except insofar as the DGCL
shall be mandatorily applicable to the Merger and the rights of stockholders in
connection therewith.
16. No Benefit to Others. Except as expressly set forth in Section 5.9,
--------------------
the representations, warranties, covenants and agreements contained in this
Agreement are for the sole benefit of the parties hereto, and their respective
successors and assigns, and they shall not be construed as conferring, and are
not intended to confer, any rights on any other Person.
17. Effect of Termination. In the event of termination of this Agreement
---------------------
by either the
-44-
Company, Acquisition or Lucent as provided in Section 10, this Agreement shall
forthwith become void and have no effect, without any liability or obligation on
the part of Lucent, Acquisition or the Company, other than the provisions of
Section 2.23, Section 5.10, Section 7 through (and including) Section 21 but
excluding Section 10, which provisions survive such termination, and except to
the extent that such termination results from the willful and material breach by
a party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
18. Severability. If any term or other provision of this Agreement is
------------
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of the Agreement shall
remain in full force and effect. Upon such determination, the parties hereto
shall negotiate in good faith to modify this Agreement so as to give effect to
the original intent of the parties to the fullest extent permitted by applicable
law.
19. Section Headings. All section headings are for convenience only and
----------------
shall in no way modify or restrict any of the terms or provisions hereof.
20. Schedules and Exhibits. All Schedules and Exhibits referred to herein
----------------------
are intended to be and hereby are specifically made a part of this Agreement.
21. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, and the Company,
Acquisition and Lucent may become a party hereto by executing a counterpart
hereof. This Agreement and any counterpart so executed shall be deemed to be
one and the same instrument.
-45-
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement as of the date first above written.
LUCENT TECHNOLOGIES INC.
By: /s/John T. Dickson
-------------------------------------------
Name: John T. Dickson
Title: Executive VP and CEO, Microelectronics
and Communications Technologies
SOLARA ACQUISITION INC.
By: /s/John T. Dickson
-------------------------------------------
Name: John T. Dickson
Title: President
ORTEL CORPORATION
By: /s/Stephen R. Rizzone
-------------------------------------------
Name: Stephen R. Rizzone
Title: President, Chief Executive Officer
and Chairman of the Board
Glossary of Defined Terms
-------------------------
Defined Term Location of Definition
Adjusted Option.......................................... Section 5.6(a)
Acquisition.............................................. Preamble
Acquisition Agreement.................................... Section 5.2(b)
Acquisition Common Stock................................. Recitals
Affiliate................................................ Section 11
Agreement................................................ Preamble
Applicable Period........................................ Section 5.2(a)
Authorizations........................................... Section 2.14(b)
Benefit Plan............................................. Section 11
Benefits Date............................................ Section 5.8(a)
best knowledge........................................... Section 11
Cap...................................................... Section 5.9(b)
Certificate of Merger.................................... Section 1.1(b)
Certificates............................................. Section 1.8(b)
Closing.................................................. Section 1.1(b)
Closing Date............................................. Section 1.1(b)
Code..................................................... Section 11
Company.................................................. Preamble
Company Benefit Plans.................................... Section 2.17(a)
Company Board Approval................................... Section 2.20(b)
Company Common Stock..................................... Recitals
Company Disclosure Schedule.............................. Section 2
Company Filed SEC Documents.............................. Section 2.8
Company Preferred Stock.................................. Recitals
Company Proxy Statement.................................. Section 2.5(b)
Company Rights........................................... Section 2.3
Company Rights Agreement................................. Section 2.3
Company SEC Documents.................................... Section 2.6
Company Stockholder Approval............................. Section 2.20(a)
Company Stockholders Meeting............................. Section 5.3(b)
Company Stock Options.................................... Section 2.3(b)
Company Stock Plans...................................... Section 2.3(a)
Confidentiality Agreement................................ Section 8
Continuation Period...................................... Section 5.8(a)
DGCL..................................................... Recitals
Effective Time........................................... Section 1.1(b)
Environmental Laws....................................... Section 11
ERISA.................................................... Section 2.18(a)
Exchange Act............................................. Section 2.5(b)
-i-
Exchange Agent........................................... Section 11
Exchange Fund............................................ Section 1.8(a)
Exchange Ratio........................................... Section 1.5(c)
GAAP..................................................... Section 11
Governmental Entity...................................... Section 2.5(b)
Hazardous Substances..................................... Section 11
HSR Act.................................................. Section 2.5(b)
Indemnified Party........................................ Section 5.9(a)
Intellectual Property Rights............................. Section 2.15(a)
IRS...................................................... Section 2.18(b)
Laws..................................................... Section 2.14(a)
Liens.................................................... Section 11
Lucent................................................... Preamble
Lucent Authorized Preferred Stock........................ Section 3.2
Lucent Common Stock...................................... Section 3.2
Lucent Disclosure Schedule............................... Section 3
Lucent Filed SEC Documents............................... Section 3.8
Lucent Junior Preferred Stock............................ Section 3.2
Lucent Plans............................................. Section 5.8(b)
Lucent Registration Statement............................ Section 2.7
Lucent SEC Documents..................................... Section 3.6
Material Adverse Effect.................................. Section 11
Merger................................................... Recitals
Nasdaq................................................... Section 2.5(b)
NYSE..................................................... Section 1.7
Option Agreement......................................... Recitals
Parachute Gross-Up Payment............................... Section 2.18(d)
Permitted Liens.......................................... Section 11
Person................................................... Section 11
reasonable best efforts.................................. Section 11
Restraints............................................... Section 6.1(d)
SEC...................................................... Section 2.5(b)
Securities Act........................................... Section 2.6
Subsidiary............................................... Section 11
Superior Proposal........................................ Section 5.2(b)
Surviving Corporation.................................... Section 1.1(a)
Takeover Proposal........................................ Section 5.2(a)
Tax...................................................... Section 11
Tax Return............................................... Section 11
Termination Fee.......................................... Section 5.10(b)
-ii-